On October 21, 2025, Citi Research initiated coverage of Strategy (formerly MicroStrategy), assigning a “Buy/High Risk” rating and a $485 price target. This analysis positions the company as a leveraged bet on Bitcoin, directly tying its future to Citi’s bullish 12-month Bitcoin forecast of $181,000.
The Rationale Behind the “High Risk” Buy
Citi’s outlook is built on a clear but risky premise. The bank views Strategy as the clearest public-market proxy for Bitcoin exposure, with its stock performance acting as an amplified version of BTC’s price movements. This leverage means the stock can deliver outsized gains if Bitcoin appreciates, but it also exposes investors to steeper potential losses.
The valuation is mathematically linked to Citi’s Bitcoin forecast. The $485 price target is based on a model that assumes Strategy’s shares will trade at a 25% to 35% premium to the net asset value (NAV) of its Bitcoin holdings, a range consistent with the firm’s historical trading pattern. This premium reflects the market’s willingness to pay extra for the structured, corporate-backed Bitcoin exposure that Strategy provides.
Strategy’s Substantial Bitcoin Bet
The foundation of this trade is Strategy’s massive and growing Bitcoin treasury. The company is the world’s largest corporate holder of Bitcoin, with 640,418 BTC in its reserves as of late October 2025, acquired at an average cost of $74,010 per bitcoin. At current prices, this hoard is valued at over $72.5 billion and represents a significant unrealized gain for the company.
Strategy has transformed its business model to focus almost entirely on Bitcoin accumulation, using various methods like selling stock and issuing convertible debt to fund continuous purchases. This aggressive strategy of leveraging its balance sheet to buy Bitcoin is central to its identity and the reason it can offer amplified returns compared to owning Bitcoin directly.
Acknowledging the Inherent Risks
Citi’s “High Risk” label is a crucial part of the rating. The primary risk is an obvious one: if the price of Bitcoin falls, Strategy’s stock is expected to fall significantly more. Citi’s bear-case scenario outlines that a 25% drop in Bitcoin could lead to a 61% decline in MSTR stock, highlighting the extreme volatility investors must be prepared to accept.
Furthermore, Strategy’s funding model introduces the risk of shareholder dilution. The company’s strategy of issuing new shares or debt to buy more Bitcoin can reduce the ownership percentage of existing shareholders over time. Therefore, the success of an investment in Strategy is entirely contingent on the twin engines of Bitcoin’s price appreciation and the company’s ability to skillfully manage its capital-raising efforts.
