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Strategy's Shifting Bitcoin Approach Creates Market Uncertainty, Standard Chartered Says
Summary
Standard Chartered analysts report that uncertainty over the evolving Bitcoin strategy of major corporate holder Strategy is creating near-term price pressure, but the bank maintains a $100,000 year-end price target for the cryptocurrency.
A perceived shift in the Bitcoin accumulation strategy of Strategy (formerly MicroStrategy), the largest corporate holder of the asset, is creating near-term market uncertainty, according to a research note from Standard Chartered. The bank maintains, however, that this is likely a temporary "overhang" and is reiterating its bullish price forecast for the cryptocurrency.
Shifting Corporate Strategy
In a note to investors on Friday, Standard Chartered analyst Geoff Kendrick said that Strategy, which holds 843,775 coins representing over 4% of Bitcoin's total eventual supply, "appears to be pivoting from its 'never sell Bitcoin' mantra to a more complex approach." This ambiguity has introduced "noise" into the market, contributing to recent price weakness.
The pivot is reportedly driven by a decline in Strategy's mNAV metric, which divides its enterprise value by its Bitcoin holdings. With this valuation metric falling to around 1.0, the company's long-standing model of issuing new shares to fund Bitcoin purchases has become less effective, according to the bank's analysis.
Market Impact and Outlook
AdStandard Chartered suggests Strategy is now moving toward using its substantial Bitcoin reserves as backing for its preferred stock, STRC. The note highlights that STRC, with approximately $10 billion in notional value outstanding, is "heavily over-collateralised" and should trade back to its $100 par value from its current level of around $90.
Kendrick stated that effective communication from Strategy about this new approach "is key to reassuring markets that wholesale selling is unlikely." If the company's signaling is successful, it should remove the need for Strategy to sell any of its Bitcoin holdings, thereby alleviating a major source of market concern.
Despite the short-term headwinds, Standard Chartered views the recent price action as "mostly noise rather than a signal of BTC's medium-term direction." The bank is maintaining its end-2026 Bitcoin price forecast of $100,000.