Strategy (MSTR) Gains in Pre-Market After Citi Upgrades Bitcoin Outlook to $113K

TLDR

• Citigroup upgraded Strategy (MSTR) with a new price target of $240, up from $136, while maintaining a Buy rating.
• The revised target suggests approximately 50% potential upside based on MSTR’s October 1 closing price of $160.50.
• The bank increased its 12-month Bitcoin price projection to $113,000, up from a previous estimate of $82,000.
• Pre-market trading on Friday saw MSTR shares advance 2.7% following the announcement.
• As of September 27, Strategy held 847,666 BTC, purchased at a total cost of $63.95 billion.

Strategy (MSTR) stock advanced 2.7% during Friday’s pre-market session. The gains followed an announcement from Citigroup, which boosted its price target on the Bitcoin-focused firm to $240, up sharply from $136.

Strategy Inc, MSTR

The investment bank reaffirmed its Buy rating. Based on MSTR’s closing price of $160.50 on October 1, Citigroup’s revised target points to roughly 50% upside potential.

The adjustment wasn’t made in isolation. It came on the heels of Citi’s updated Bitcoin price forecast, which now stands at $113,000 over the next 12 months—a substantial increase from the prior $82,000 estimate.

The firm also adjusted its ether projection upward to $3,028 from $2,240. Analysts attributed the change to improving crypto market dynamics and more consistent inflows into exchange-traded funds.

Breaking Down Citigroup’s Valuation Model

Citigroup’s updated price target consists of two key components. Approximately 34% of the projected upside stems from the elevated Bitcoin price forecast. The remaining 16% derives from an anticipated increase in Strategy’s valuation multiple relative to net asset value (mNAV).

The bank increased its Bitcoin Yield Multiple assumption to 4.0x from a prior 2.5x. This change drove the implied mNAV higher to 1.24x, compared with 1.065x previously.

Citi observed that mNAV has historically fluctuated between 1.25x and 1.50x during periods when Bitcoin traded above $85,000 to $90,000. However, analysts adopted a more conservative figure due to Strategy’s expanding cash position, which they described as dilutive to Bitcoin exposure per share.

This marks a reversal from an earlier adjustment. Citi had previously lowered its target to $136 from $260 in 2026 after reducing its Bitcoin outlook. Friday’s upgrade partially unwinds that prior reduction.

Catalysts Behind the Crypto Rally

The broader cryptocurrency market has posted impressive gains recently. Bitcoin has surged nearly 40% over the past three months, while ether climbed approximately 68%, according to CoinGecko.

These advances have trimmed both assets’ year-to-date declines to around 4% and 9%, respectively. A weakening U.S. dollar, prompted by Treasury buybacks of longer-maturity bonds, has also provided support.

U.S. spot Bitcoin ETFs had recorded approximately $5.7 billion in net outflows by mid-July. Since then, flows have reversed course, and Citigroup anticipates another $5 billion in net inflows over the coming year.

Legislative developments haven’t been entirely smooth. The Senate recently failed to advance the Clarity Act, narrowing prospects for near-term market-structure reforms.

That said, subsequent regulatory announcements from the SEC helped offset some of the disappointment. Overall, the policy landscape appears neutral for the moment.

Meanwhile, Strategy continues its Bitcoin accumulation strategy. According to its September 28 Form 8-K filing, the company acquired 1,665 BTC between September 21 and 27 at an average price of $85,681 per coin.

These purchases were financed through sales of Class A common stock. Strategy’s total Bitcoin position now stands at 847,666 BTC, accumulated at a total cost of $63.95 billion, reflecting an average purchase price of $75,437.

The same disclosure reported a USD Reserve of approximately $5.02 billion alongside $1.00 billion in cash. The company has also continued buying back its variable-rate preferred shares using proceeds from at-the-market offerings.

Earlier in September, Strategy purchased 950 BTC for $75.7 million using cash on hand rather than issuing new shares. That transaction pushed its holdings to 846,000 Bitcoin at that point.

With Bitcoin hovering near $86,000 in early October, the current market value of Strategy’s holdings exceeds the aggregate purchase price recorded on its balance sheet.