Citi raised its 12-month Bitcoin target price from $82,000 to $113,400, nearly a 40% increase. It also lifted its Ethereum target from $2,240 to $3,028. Meanwhile, it boosted the target price for $MSTRB from $136 to $240 while maintaining a “Buy,” noting that based on the Oct 1 closing price of $160.5, there is about 50% upside.
Breaking it down is even more interesting: of that 50%, about 34 percentage points come from an upward revision to the price expectation, while only about 16 percentage points come from expansion in valuation multiples. Citi increased its assumed earnings multiple for $BTC from 2.5x to 4x, but the company’s premium versus net assets is capped at only 1.24x, because the move of Strategy holding more cash itself causes dilution.
My take: this is pricing the “crypto price rally” and the “company premium rally” separately—it’s restrained rather than euphoric. Don’t forget Strategy holds 847,666 BTC at an average cost of about $75,400. With its leverage structure, its sensitivity to the BTC price is far higher than that of spot holdings.
Would you rather hold $BTC directly, or use it as a high-beta substitute?
Breaking it down is even more interesting: of that 50%, about 34 percentage points come from an upward revision to the price expectation, while only about 16 percentage points come from expansion in valuation multiples. Citi increased its assumed earnings multiple for $BTC from 2.5x to 4x, but the company’s premium versus net assets is capped at only 1.24x, because the move of Strategy holding more cash itself causes dilution.
My take: this is pricing the “crypto price rally” and the “company premium rally” separately—it’s restrained rather than euphoric. Don’t forget Strategy holds 847,666 BTC at an average cost of about $75,400. With its leverage structure, its sensitivity to the BTC price is far higher than that of spot holdings.
Would you rather hold $BTC directly, or use it as a high-beta substitute?