James Richardson
Strategy, previously known as MicroStrategy, might see its bitcoin reserves soar past 1 million BTC—roughly 5% of the cryptocurrency’s 21 million total supply—under a bull case scenario outlined by Bernstein analysts. This projection follows the company’s strong Q4 financial performance and recent BTC purchases, positioning it as a leader in the bitcoin treasury space.
Analysts Upgrade Strategy’s Outlook
Led by Gautam Chhugani, Bernstein’s research team revised their forecasts after reviewing Strategy’s latest results. They assigned an outperform rating with a $600 price target, suggesting a 75% upside. Using a sum-of-the-parts valuation, they assessed the firm’s software business at a 2x EV/sales multiple and added a 55% premium to its Bitcoin holdings, reflecting historical trends since Strategy embraced its bitcoin strategy in August 2020. The analysts now predict earnings per share of $207, up from $67.50, driven by gains in its expanded bitcoin treasury.
Bernstein forecasts bitcoin prices to hit $200,000 by 2025, climb to $500,000 by 2029, and reach $1 million by 2033, despite periodic bear markets. In the bull case, Strategy’s BTC stash could grow to 5.8% of the current 19.8 million circulating supply, up from 2.5% today. This assumes favorable capital markets, lower interest rates, and aggressive acquisition scaling, with debt ballooning to $100 billion (from $11 billion) and equity proceeds hitting $84 billion. In contrast, the base case sees holdings at 4% with $51 billion in debt, while the bear case limits it to 2.6%, hampered by a prolonged downturn after a $200,000 peak in 2025.
Latest Bitcoin Purchases Boost Holdings
On Monday, the company revealed it now owns over 500,000 BTC after acquiring 6,911 BTC for $584.1 million in cash, at an average price of $84,529 per bitcoin, between March 17 and March 23. Funded by sales of MSTR class A stock and STRK perpetual strike preferred stock, the firm’s total holdings stand at 506,137 BTC, valued at over $44 billion. Co-founder Michael Saylor noted these assets were bought at an average of $66,608 per BTC, costing $33.7 billion overall. Bernstein highlights Strategy’s knack for leveraging global capital pools, capturing 5% of 2024’s global equity capital, 1% of convertible debt, and 15% of preference issues.
This quarter, Strategy raised $1.5 billion through STRK and STRF preference shares, offering 8% and 10% dividends, respectively. Combined with its 21/21 plan targeting $42 billion in capital, the firm aims for cost-efficient funding with debt at 13% and no payments until 2028. Despite an $89 billion market cap trading above its bitcoin net asset value, analysts see its bitcoin treasury as the core operation, managing risks effectively despite 50% BTC volatility in 2024.
