Strategy Buys $43M Bitcoin, Citi Sets $485 Target

Strategy’s $43 million Bitcoin purchase last week represents the company’s largest acquisition of the cryptocurrency in nearly a month, according to the company’s Monday press release. The Tysons Corner, Virginia-based firm now controls approximately 640,800 Bitcoin, with the stockpile recently valued at $73.6 billion based on Bitcoin trading around $114,800 on Monday according to crypto markets data provider CoinGecko. This latest transaction continues Strategy’s aggressive accumulation strategy despite recent market volatility.

The market responded positively to the announcement, with Strategy shares rising 1.9% to $294 shortly after markets opened according to Yahoo Finance data. However, the company’s stock price remains down 4.8% from $314 over the past month, reflecting broader market pressures. The disclosure came as Bitcoin hovered near a two-week high, with easing geopolitical tensions between the U.S. and China benefiting risk assets in recent days.

In a significant departure from its historical approach, Strategy funded its latest Bitcoin purchase entirely through proceeds from the issuance of preferred shares rather than common stock offerings. While the company has traditionally issued common shares at a premium relative to its Bitcoin holdings to grow its stockpile, Strategy has left this primary funding source untapped since around September 29, when it unveiled a $22 million Bitcoin purchase and reported raising $128 million.

Strategy has unveiled several types of preferred shares this year as an alternative method to fund Bitcoin acquisitions, with some of these financial products requiring quarterly dividend payments. This shift in capital strategy coincides with relatively smaller Bitcoin purchases in recent weeks, totaling 196 Bitcoin, 219 Bitcoin, and the current 390 Bitcoin acquisition – among some of the smallest Bitcoin purchases Strategy has disclosed this year.

The company’s co-founder and Executive Chairman Michael Saylor highlighted the purchase on social media platform X on Sunday, posting ‘It’s Orange Dot Day’ while displaying a chart of the company’s previous Bitcoin acquisitions. This public endorsement underscores the company’s continued commitment to Bitcoin despite the changing funding approach.

Citi analysts last week described Strategy as ‘a bellwether of BTC’s potential upside and downside momentum’ while maintaining a $485 price target for the company’s shares. The bullish assessment positions Strategy as a key indicator for Bitcoin’s future trajectory, though the analysts cautioned that a drop in Bitcoin’s price could lead to magnified losses for Strategy shareholders.

According to Citi’s analysis, the premium that Strategy trades at relative to its Bitcoin holdings could persist if Bitcoin maintains positive momentum. However, data from Bitcoin Treasuries shows this premium has already shrunk to 1.16x on Monday from 1.25x over the past month, indicating changing market perceptions of the company’s valuation relative to its underlying Bitcoin assets.

Market sentiment appears aligned with Strategy’s continued accumulation strategy. According to a Myriad market survey, more than 71% of respondents agreed with crypto trader Mando’s prediction that Bitcoin will regain $120,000 rather than fall to $100,000 as forecast by crypto entrepreneur KBM. Myriad, a unit of Dastan – the parent company of editorially independent Decrypt – provides additional context for the optimistic outlook surrounding Bitcoin’s price trajectory.