Citigroup has given a "Buy" rating on Strategy due to its optimistic outlook on Bitcoin

ChainCatcher news, according to CoinDesk, investment bank Citigroup has initiated coverage on Strategy (MSTR) for the first time, giving it a buy/high-risk rating and a target price of $485, positioning the stock as a leveraged bet on Bitcoin.

On Tuesday morning, MSTR's stock price rose by 1.5%, approximately reporting at $301. Citigroup stated in a report released on Tuesday that this target price reflects its prediction that Bitcoin will reach $181,000 in 12 months, representing a 63% upside from current levels, as well as a net asset value (NAV) premium of 25% to 35%, which aligns with Strategy's historical Bitcoin earnings multiple of 2.5 to 3.5 times.

Citigroup analysts believe this structure makes the stock a magnified bet on Bitcoin's performance, with significant upside potential in a bull market, while a price reversal could lead to a sharp pullback. Citigroup noted that in the most pessimistic scenario, if Bitcoin falls by 25% and the NAV premium drops from 35% to a 10% discount, the stock could lose about 61%. The report stated that Strategy is expected to continue issuing convertible bonds, preferred stock, and equity based on NAV premium conditions to expand its Bitcoin holdings.