TD Cowen lowers the target price for Strategy to $440. How do you view the opportunities and risks of crypto "concept stocks"?

Investment bank TD Cowen has lowered the one-year target stock price for Bitcoin reserve company Strategy (formerly MicroStrategy) from $500 to $440. The primary reason for the adjustment is that ongoing issuance of equity and preferred shares dilutes the “Bitcoin yield” (i.e., the growth rate of Bitcoin holdings per share), as the company’s aggressive acquisition strategy relying on equity financing faces earnings dilution challenges.

Behind the Target Price Adjustment

According to a recent report issued by TD Cowen analysts, this publicly traded company, known for its aggressive Bitcoin investment strategy, has had its target price downgraded. The downgrade is mainly based on a reassessment of the future “Bitcoin yield.” Analysts expect Strategy to acquire approximately 155,000 Bitcoins in fiscal year 2026, far exceeding the previous estimate of 90,000.

However, this accelerated accumulation is expected to be primarily financed by issuing more common and preferred shares. This financing method will dilute earnings per share, leading to a reduction in the projected Bitcoin yield for fiscal year 2026 from 8.8% to 7.1%, significantly below the 22.8% level in fiscal year 2025.

Financing Models and Dilution Risks

Strategy’s core business model involves raising capital through the capital markets to continuously purchase and hold Bitcoin. Its stock performance is highly tied to Bitcoin prices and often includes a certain “Bitcoin premium.”

The company has various flexible financing tools, including issuing common shares, different series of preferred shares (such as STRC and other variable-rate perpetual preferred shares), and other capital market instruments. These mechanisms together form its “financing toolbox.” As of June 30, 2025, Strategy held 597,325 Bitcoins, with an accumulated cost basis of about $42.4 billion (average purchase price approximately $70,982 per Bitcoin), and raised funds through its at-the-market (ATM) stock issuance program for further purchases.

To maintain its high-leverage Bitcoin investment strategy, Strategy continues to raise funds from the capital markets. During the week ending January 11, 2026, the company issued about 6.8 million common shares and 1.2 million STRC series preferred shares through its ATM plan, raising approximately $1.25 billion net proceeds. Nearly all of this was used to purchase 13,627 Bitcoins, increasing its total holdings to about 687,410 Bitcoins.

The key to this financing model is efficiency: when the financing price is close to its net asset value per Bitcoin, the short-term value created for shareholders (i.e., Bitcoin yield) is very limited. Its long-term logic is entirely based on the expectation that Bitcoin prices will rise significantly.

High-Risk “Bitcoin Concept Stock” Positioning

Strategy is regarded as one of the purest Bitcoin concept stocks, providing traditional stock market investors with a unique tool to gain Bitcoin exposure without directly holding cryptocurrencies. Its complex capital structure (including common shares, different series of preferred shares, and convertible bonds) aims to meet the needs of investors with varying risk preferences—some focusing on fixed dividends, others on capital appreciation tied to Bitcoin prices. However, this structure also amplifies risks. The company’s market value reflects not only the value of its Bitcoin holdings but also market expectations of its continued success in executing its financing-acquisition strategy.

Any factors affecting its financing ability or causing Bitcoin yields to decline continuously (as noted in the TD Cowen report) could undermine its high valuation. Meanwhile, the sharp volatility of Bitcoin prices itself will be magnified by its leveraged holdings, transmitting to the stock price.

Market Environment and Future Outlook

The current Bitcoin market is at a delicate stage. On-chain data shows that profit-taking pressure among enterprises at the end of 2025 has eased, and the market structure appears clearer in early 2026.

The demand from corporate treasuries (such as Strategy’s activities) provides temporary support to the market, but its capital inflows are characterized by explosive and irregular patterns rather than steady flows. Glassnode’s analysis indicates that this demand is more opportunistic, relying on price-driven events. Meanwhile, funds flowing into U.S. spot Bitcoin ETFs have begun to turn back into net inflows, suggesting institutional demand may be warming up, providing another structural support for Bitcoin prices.

Although TD Cowen has lowered Strategy’s target price, it maintains a constructive view of it as a Bitcoin investment vehicle. Analysts forecast that, with improved financing efficiency and expected Bitcoin price increases, the company’s Bitcoin yield could rebound to 8.1% in fiscal year 2027. The firm remains optimistic about Bitcoin’s long-term price, predicting it could reach about $177,000 by December 2026 and about $226,000 by December 2027.

Bitcoin Market from the Gate Perspective

Complementing the investment in Bitcoin concept stocks is direct focus on the Bitcoin spot market itself. As of January 15, 2026, the Bitcoin market shows the following key data:

The market shows a moderate upward trend in the short term, with profit-taking pressure among long-term holders easing, laying a foundation for price consolidation at key levels. Glassnode analysis points out that the next critical observation is whether the market can sustainably regain the short-term cost basis (currently around $99,100), which will be an important signal for a trend shift toward a more positive phase.

The derivatives market also shows signs of cautious recovery in risk appetite. Futures open interest has begun to rebuild after a correction, and the skewness in options markets is normalizing, indicating traders are shifting focus from pure downside protection to some upside participation.

Strategy’s stock price fluctuated after the TD Cowen report was released. Meanwhile, Bitcoin prices have recently rebounded in the Gate market, rising over 5.63% in the past 7 days, challenging key psychological and technical levels again. On-chain data from Glassnode reveals the current market dynamics: on one hand, demand from corporate treasuries and ETF fund inflows provide support; on the other hand, there is still significant trapped supply near historical highs, exerting ongoing pressure. The unwinding of Bitcoin options open interest that fell more than 45% from its high has cleared the complex structural hedges at year-end, making early-year market risk expressions clearer and more direct, no longer constrained by large fixed strike positions.