Strategy is positioned for a ‘prolonged crypto winter’ after boosting cash reserve, TD Cowen says

Bitcoin treasury company Strategy (ticker MSTR) said Monday that it has increased its U.S. dollar reserve to $2.19 billion after raising about $748 million through the sale of common shares. The expanded cash reserve is sufficient to cover the company’s interest and dividend obligations for roughly 32 months and should help it withstand challenging market conditions, according to investment bank TD Cowen’s TD Securities unit.

“The move underscores the company’s balance sheet strength and should alleviate concerns about its ongoing viability, even in a prolonged ‘crypto winter’ scenario,” TD Securities analysts led by Lance Vitanza wrote in a report on Monday. “Shoring up liquidity during times of stress is always prudent, in our view, and we believe all Strategy stakeholders are materially better off” as a result of these actions.

TD Securities reiterated its buy rating on Strategy, maintaining a $500 price target over the next 12 months. Strategy shares were trading around $165 at the time of writing, down over 43% year-to-date, according to The Block’s MSTR price page.

“With potential upside to our target nearly 200%, we recognize that our price target may seem ‘out of context,’” the analysts wrote. However, given Strategy’s “embedded leverage to underlying bitcoin price activity combined with significant volatility in both bitcoin price and Strategy’s bitcoin premium, our price target represents a reasonable outcome in one year’s time,” they added.

Strategy’s USD reserve 

Strategy first disclosed details of its USD reserve on Dec. 1, when it said it had raised $1.44 billion to build a liquid cash buffer to support dividend payments on preferred stock and interest on outstanding debt. Over the past four weeks, the company has sold more than 22 million shares — roughly in line with average daily trading volume — without disrupting market liquidity, the analysts noted.

“In moving so aggressively to shore up its balance sheet, Strategy has gone a long way toward putting to bed any lingering questions around its ongoing access to the capital markets,” the analysts wrote. “Concerns around the viability of Strategy’s balance sheet are overblown, in our opinion.”

Strategy is the world’s largest bitcoin treasury company, currently holding 671,268 bitcoin, worth over $59 billion, according to The Block’s Data Dashboard. TD Cowen continues to forecast that Strategy could own about 835,000 bitcoin by the end of fiscal year 2027. “We forecast intrinsic bitcoin value of roughly $380 per share in one year’s time and $515 in two years’ time,” the analysts added.

The analysts also pointed to the U.S. Federal Reserve’s request for public feedback on a proposed “payment account” — sometimes referred to as a “skinny master account” — that could give certain eligible institutions, potentially including some crypto-related firms, limited access to Fed payment rails. The move signals growing openness to crypto firms’ participation in the financial system, and as a result, “a ‘crypto spring’ looks at least as likely to us,” the analysts wrote.

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