Bitcoin Crosses $86,000 on Fed Pause Hopes. Strategy Leads Crypto Stocks Higher. — Barrons.com

By Mackenzie TatananniBitcoin continued its recovery on Friday as the price of the world's largest cryptocurrency by market value breached the $86,000 mark, pulling crypto-linked stocks higher along with it.The move followed remarks from Fed Vice Chairman Philip Jefferson, who urged patience Thursday as the central bank evaluates economic data before making further rate decisions. Jefferson's comments align with a growing chorus of Fed officials signaling a potential delay in rate hikes beyond October.At last check, Bitcoin has risen 2.7% to $86,885 over the past 24 hours, according to CoinDesk. The jump above $86,000 lifted a handful of crypto-adjacent stocks, namely Strategy, which advanced nearly 4% on Friday. Coinbase Global and Robinhood Markets gained 1.4% and 3.9%, respectively.The company formerly known as MicroStrategy remains the world's largest corporate holder of Bitcoin, with 847,666 Bitcoin on its balance sheet as of late September. While it retains a legacy software business, the market predominantly treats the stock as an equity proxy for Bitcoin, meaning its stock price closely tracks the performance of the world's leading cryptocurrency.Amid the rally, Citi analyst Peter Christiansen reiterated a Buy rating on Strategy shares and nearly doubled his price target to $240 from $136 on Friday. The revision stems from Citi's updated 12-month Bitcoin forecast of $113,400, up 39% from its previous estimate.The update also accounts for an expected expansion in Strategy's market multiple of net asset value (mNAV) to 1.24, up from 1.20 on Friday. A multiple above 1.0 signals that Strategy is trading at a premium to its underlying Bitcoin holdings.Because Christiansen expects Bitcoin to remain well above the $85,000 to $90,000 range, historical trends suggest the stock could trade at a 25% to 50% premium relative to its crypto holdings. Taking a conservative approach, Citi applied a 24% premium, translating to an mNAV of 1.24.The valuation assumes Bitcoin's price momentum remains strong, allowing the company to continue executing its strategy of issuing debt and equity to acquire more Bitcoin on an accretive basis. However, Christiansen noted that Strategy's dilutive cash reserve accumulation must be factored in, prompting Citi to take a more conservative stance relative to historical norms.Write to Mackenzie Tatananni at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.