Analysts Defend Bullish Stance on Strategy Despite Share Price Weakness

Bernstein analysts see major upside for Strategy, citing its $2.1B STRC funding model and aggressive Bitcoin accumulation, despite a lagging share price.

Market experts at Bernstein are projecting significant upside for Strategy, even as the company's shares remain under persistent pressure. Their optimism is rooted in the firm's novel approach to funding and its continued aggressive accumulation of digital assets, despite a prolonged downturn in its stock price. Bernstein analysts contend that the recent cyclical low for cryptocurrencies has now been passed.

Unconventional Funding Drives Capital Raises

Central to this bullish outlook is Strategy's use of its STRC preferred shares. The company frames this instrument as a digital credit alternative, currently offering a monthly cash dividend of 11.5%. This structure is seen as insulating Strategy's fundraising efforts from the short-term volatility endemic to crypto markets.

The model has proven effective in attracting institutional capital. Heavyweights including BlackRock and VanEck collectively hold approximately 23% of the outstanding STRC shares. So far this year alone, Strategy has raised $2.1 billion through this vehicle to finance further asset purchases. A marked increase in the monthly trading volume of these securities highlights their growing acceptance among institutional investors.

Counter-Cyclical Accumulation Continues

Contrary to expectations that the firm might scale back, Strategy used recent market weakness as a buying opportunity. The company acquired nearly 90,000 additional Bitcoin, marking its second-largest quarterly purchase since initiating this strategy in 2020. This brought its total holdings to more than 760,000 units.

Bernstein's research team bases its positive long-term view on the belief that the cryptocurrency has found a cyclical bottom. They forecast a rise to $150,000 by the end of 2026, driven by ETF inflows and broader geopolitical factors.

Market Sentiment Lags Behind Analyst Confidence

This analyst confidence, however, has yet to be reflected in the company's share price. The stock closed yesterday at €116.05, trading substantially below its key long-term trend indicators. It currently sits a notable 46% below its closely watched 200-day moving average.

This technical weakness underscores the prevailing caution among many market participants. Furthermore, the expert community is divided. While Bernstein maintains an extremely bullish position and the overall analyst consensus remains positive, Standard Chartered Bank has issued a warning, forecasting a potential decline in the cryptocurrency's price to as low as $50,000.

The stark divergence in analyst opinions, coupled with the persistent share price softness, emphasizes the binary nature of this investment. Regardless of the innovative STRC financing mechanism, the company's future valuation remains inextricably linked to the next major directional move of its core underlying crypto asset.