Citi is telling clients to buy MicroStrategy because it expects Bitcoin to rise. The bank set a $485 12-month price target for the shares and forecasts Bitcoin at $181,000 in one year and $133,000 by the end of 2025. MicroStrategy’s vast Bitcoin holdings make its stock trade like a magnified version of the coin, a view that could influence MSTR holders, corporate cash managers and traders in Bitcoin-linked products.
Citi frames the stock as a geared bet on Bitcoin, tagging the call “Buy/High Risk” and warning that a 25% drop in Bitcoin could drive a 61% fall in the shares. The sensitivity underscores the leverage embedded in the equity relative to the underlying asset.
MicroStrategy holds 638,985 Bitcoin, roughly 3% of all coins that exist, turning its balance sheet into a public gateway to the asset. When Bitcoin moves, the stock follows about 85% of the step and often overshoots, amplifying both gains and losses.
What changes for Citi and MicroStrategy
The report may push more funds to treat MicroStrategy as a Bitcoin substitute, but it also spells out clear dangers. The setup could widen the investor base while reinforcing the stock’s dependence on the coin’s trajectory.
Swings in Bitcoin hit the stock harder than the coin itself, increasing volatility for shareholders. A cash pile held in Bitcoin leaves the firm short of traditional liquidity, which can be tested in market stress. If investors stop paying a premium to net asset value, the price can deflate even if Bitcoin stays flat.
Citi’s call reinforces MicroStrategy as a leveraged proxy for Bitcoin with high potential and high risk. The outcome will hinge on the coin’s path and investor appetite for the stock’s premium to net asset value.
