Strategy's aggressive Bitcoin accumulation strategy projects holdings to potentially exceed 1 million BTC by 2033.

Bitcoin's price volatility, particularly around the $90,000 mark, is influenced by options market dynamics.

In the constantly evolving landscape of cryptocurrency, one company stands out for its unwavering commitment to Bitcoin: Strategy.

Formerly recognized as MicroStrategy, the company has become synonymous with an aggressive Bitcoin accumulation strategy, a move that has sparked widespread discussion and analysis among market observers.

Now, a new forecast by Bernstein predicts that Strategy’s Bitcoin stash could burgeon past 1 million BTC by 2033. However, this ambitious plan will require substantial capital infusion, and the company’s stock price will largely depend on the trajectory of Bitcoin’s price over the next decade.

The Largest Corporate Bitcoin Holder is Still Expanding

At present, Strategy holds 506,137 BTC, making it the largest corporate holder of Bitcoin. Bernstein’s latest forecast suggests that number could more than double, reaching 1,013,000 BTC. That would represent 5.8% of Bitcoin’s current circulating supply.

This projection assumes Bitcoin will reach major price milestones in the coming years:

* Bitcoin could hit $200,000 by the end of 2025, $500,000 by 2029, and $1 million by 2033.

* To reach these price levels, the Bitcoin market cap would need to grow to $3.5 trillion by 2025, $8.5 trillion by 2029, and $16.7 trillion by 2033. For perspective, the total market cap of all cryptocurrencies is currently around $1.5 trillion.

* These valuations are not unprecedented for major asset classes. By 2025, Bitcoin’s market cap would be about half the size of U.S. equities and a third of global investment grade bonds.

How Will Strategy Fund the Bitcoin Acquisitions?

To achieve this level of expansion, Strategy will likely need to raise a significant amount of capital. Analysts predict the company’s debt could climb from $11 billion to $100 billion, while it may also raise $84 billion through equity markets.

Bernstein’s report suggests that lower interest rates and strong investor demand will be critical to making this strategy work. If interest rates rise faster than expected, or if investors become less interested in Strategy’s stock, it could put a damper on the company’s plans.

Bitcoin Market Makers

With Bitcoin still trading below $90,000, many analysts see $90,000 as an important level where investor interest could return. Market makers, who influence short-term price movements, are expected to play a key role.

Data from Deribit shows that market makers are currently “short gamma” at this price level. This means they will need to buy Bitcoin when its price rises and sell when it falls, which could add to market volatility. Despite this, BloFin’s Griffin Ardern believes a bullish move could be ahead, especially as Friday’s options settlement approaches.

What Happens if Bitcoin Peaks and Declines?

Not all analysts believe Bitcoin will continue rising without setbacks. If Bitcoin peaks in 2025 and then enters a long-term decline, Strategy might slow down its Bitcoin purchases. In that case, its holdings may reach only 514,800 BTC, about 2.6% of the total Bitcoin supply.

If the company faces financial pressure, it may even need to sell some of its Bitcoin to manage its debt, which could still rise to around $51 billion, though at a slower pace than in the more optimistic scenario.

Bernstein Remains Bullish on Strategy

Despite the risks, Bernstein remains confident in Strategy’s long-term position. The firm has given the company an “outperform” rating and set a $600 price target, which would be a 75% increase from current levels.

Bernstein’s valuation model applies a 50% weighting to the company’s Bitcoin holdings, a 30% weighting to its revenue growth and a 20% weighting to its price-to-book multiple.

At the beginning of 2023, Strategy’s stock price was around $200, but it has since dropped to $340. As of Friday’s closing price, Strategy’s stock is trading at $331.97.