Bernstein has raised its price target for MicroStrategy to $600. They credit this increase to the company’s innovative treasury model and positive outlook on Bitcoin. However, some analysts are concerned. They warn that MicroStrategy's strategy could introduce systemic risks and relies heavily on Bitcoin's price going up.

MicroStrategy Inc. (MSTR) is often called the “Bitcoin magnet.” This is because it has attracted billions in global capital through its unique Bitcoin treasury strategy.

In a report released on Monday, Bernstein highlighted MicroStrategy's significant role in bringing Bitcoin into mainstream finance. They project that the company could hold 4% of the global Bitcoin supply by 2033, up from just 1.7% today. Yet, skeptics like analyst Kryptokrates raise alarms about the risks involved, questioning whether this strategy can last in the long run.

Bernstein praised MicroStrategy's approach, which uses convertible debt and equity raises to accumulate Bitcoin. Currently, the company owns about 300,000 BTC, valued at around $32 billion. They acquired these at an average price of about $49,900 per Bitcoin. Bernstein believes that if Bitcoin reaches $1 million per coin, MicroStrategy's holdings could grow to that projected 4% of the global supply by 2033.

“MicroStrategy's Bitcoin treasury model is unprecedented,” noted Bernstein. They described the company as being on a relentless path to attract billions in global capital for Bitcoin investments. So far, MicroStrategy has raised over $7 billion through convertible debt, with a goal of securing $42 billion in capital by 2027. This strategy includes adding Bitcoin to its balance sheet, which increases stock volatility, and using convertible debt to raise capital at lower costs.

Bernstein sees this strategy as sustainable if market conditions are favorable. They have boosted their price target for MicroStrategy's stock to $600, indicating a potential 42% upside from its current price of $421.88.

While Bernstein remains optimistic, critics like Kryptokrates caution that MicroStrategy's financial engineering could pose serious risks. “Saylor created the perfect financial perpetual motion machine. It works until it doesn’t. The question isn’t if, but when,” the analyst tweeted.

Kryptokrates pointed out several potential vulnerabilities:

  • Market Risk: “A Bitcoin price collapse could trigger a systemic failure.”
  • Leverage Concerns: “MicroStrategy's total debt is about $3 billion—a massive bet on Bitcoin’s price going up.”
  • Regulatory Pressure: “Any regulatory crackdown could disrupt the model.”
  • Retail Investor Risk: “Small investors think they're ‘buying Bitcoin exposure’ but are actually buying systemic risk.”

Kryptokrates also highlighted warning signs, such as increasing convertible note issuances and more aggressive Bitcoin buying, suggesting that financial risks may rise as the company expands.

Bernstein emphasized that MicroStrategy's strategy appeals to institutional investors due to high liquidity, Bitcoin exposure, and regulatory compliance. However, Kryptokrates warned that retail investors might misinterpret the risks. He tweeted, “Nothing is free in finance. Leverage works both ways. Always check the fine print.”

In Bernstein's best-case scenario, MicroStrategy continues to thrive on Bitcoin's price increases, potentially reaching $1 million per coin by 2033. On the flip side, Kryptokrates offered a stark warning: “Worst case—Bitcoin crashes, notes demand repayment, share price collapses, system fails.”