Strategy Hit by Index Overhang and Premium Drop, but TD Cowen Analysts Call for $535 Target

Michael Saylor’s Strategy — formerly MicroStrategy — is seeing its bitcoin premium collapse toward levels last witnessed during the 2021–2022 “crypto winter,” according to new analysis from TD Cowen’s TDSecurities. 

In a note on Monday, managing director Lance Vitanza highlighted updated bitcoin-premium charts that illustrate a steady decline stretching across both the trailing twelve months and the broader post-2020 period.

Strategy Bitcoin premium trailing 12 months (Source: TD Cowen)

Vitanza noted that Strategy neither issued shares under its at-the-market programs nor purchased new bitcoin on Monday — a detail that sharpened investor focus on where the premium sits today. 

Also read: Strategy Suddenly Pauses Bitcoin Buying Streak — Is Saylor Signaling a Major Shift?

Both charts, he said, show the premium compressing sharply from its highs late last year and now drifting back toward the trough range seen during the last bear-market capitulation.

What the Premium Actually Measures

In Strategy’s case, the bitcoin premium refers to the gap between the company’s share price (ticker MSTR) and the net asset value of its bitcoin holdings. 

A wider premium typically signals that investors view Strategy as a leveraged vehicle for bitcoin exposure. When enthusiasm retreats, the stock trades closer to its underlying bitcoin value, causing the premium to contract.

Today’s charts show that enthusiasm has cooled dramatically. The premium — which once soared above peak levels late last year — is now approaching the narrowest spreads seen during the late-2021 to early-2022 downturn. 

The decline has coincided with uncertainty surrounding MSCI’s potential removal of “public bitcoin treasury companies” (PBTCs) from major indices, an overhang that analysts say has placed meaningful structural pressure on the stock.

TD Cowen: Still Bullish, Still Targeting $535

Despite the shrinking premium, TD Cowen remains resolutely bullish. 

Vitanza and co-author Jonnathan Navarrete reiterated their buy rating and $535 price target — nearly 200% above Strategy’s current ~$179 share price — arguing the figure represents “a reasonable outcome in one year’s time.”

Strategy share price (Source: Google Finance)

Their detailed report maintains the firm’s long-term bitcoin model. TD Cowen continues to project that Strategy will control 815,000 BTC by the end of FY27, equivalent to roughly $185 billion in intrinsic bitcoin value — or around $540 per share — by December 2027.

“Our price target at $535 thus continues to reflect a 0% premium to intrinsic value per share at Dec-27,” the analysts wrote.

MSCI Removal Expected — and Viewed as Misguided

TD Cowen’s updated analysis devotes significant attention to the growing MSCI overhang. The research team now expects Strategy to be formally removed from all MSCI indices in February, aligning with MSCI’s own proposal to exclude PBTCs. A final decision is expected in mid-January.

“The decision may be as misguided as it is unfortunate,” the report said. “Strategy is neither a fund, a trust, nor a holding company. It is instead a public operating company with a $500 million software business and a unique treasury strategy using Bitcoin as productive capital.”

They argue that removing PBTCs would force passive funds to sell MSTR at already-suppressed levels — crystallizing losses for investors while removing exposure to one of the world’s most aggressive corporate bitcoin adopters. TD Cowen estimates roughly $2.5 billion in MSTR holdings sit inside MSCI indices, with another ~$5.5 billion in indices that could follow MSCI’s lead.

Last week, JPMorgan analysts issued a similar warning, saying MSTR could face up to $2.8 billion in forced selling from MSCI removal alone, and potentially $8.8 billion if other index providers adopt similar exclusions.

Saylor: ‘Index Classification Doesn’t Define Us’

Amid speculation around a February removal, Strategy’s chairman Michael Saylor has downplayed the threat.

“Index classification doesn’t define us,” he said last week. “Our strategy is long-term, our conviction in Bitcoin is unwavering, and our mission remains unchanged: to build the world’s first digital monetary institution.”

TD Cowen’s latest note echoes that conviction. “A bias against Strategy is a bias against bitcoin,” the analysts wrote, arguing that the stock should outperform whenever bitcoin momentum returns. They also emphasized that the company continues to acquire bitcoin faster than it accumulates liabilities.

“Though perhaps counter-intuitive,” the report concludes, “it should necessarily trade at a premium to the value of its underlying holdings if bitcoin becomes increasingly integrated into global finance.”