Investment bank TD Cowen cut Strategy's price target sharply, citing weakness in bitcoin prices.

According to blockchain media outlet Decrypt on June 30, TD Cowen lowered its price target for Strategy to $260 from $400, a 35 percent cut. It also reduced its year-end bitcoin price target to $100,000 from $140,000.

TD Cowen analysts led by Lance Vitanza cited bitcoin's prolonged weakness as the reason for the change. The report said bitcoin has failed to produce the rebound it had expected, and Strategy's enterprise value also needs to be reassessed at a more realistic level.

Bitcoin slipped below $60,000 on June 30 and has fallen more than 20 percent over the past month to around $58,400. Compared with the record high of more than $126,000 set in October last year, the drop exceeds 53 percent.

As bitcoin prices stay weak, Strategy shares have also fallen sharply. Strategy stock closed down 8.6 percent at $84.75 on the day. Since the company sold bitcoin about a month ago for the first time since 2022, the stock has fallen about 41 percent from $142.69.

TD Cowen was positive about the new capital management framework Strategy announced this week. The company's Digital Credit Capital Framework sets out how it will manage cash holdings, preferred shares and bitcoin holdings of 847,363 BTC. Analysts said the framework could improve credit transparency and flexibility in capital management.

It pointed in particular to Strategy expanding cash-like assets to about $2.55 billion. TD Cowen said securing that cash could boost market confidence that the company can maintain sufficient liquidity even during a prolonged period of bitcoin weakness.

Costs are rising for its STRC preferred shares. Strategy raised the STRC dividend rate for the eighth time on June 29 to 12 percent. That has also increased recurring dividend expenses. STRC fell 0.7 percent to $83.11 on June 30, and dropped to a record low of $71.25 last week. It is still below its par value of $100.

TD Cowen also positively assessed that Strategy more clearly linked its dividend policy, cash-holding strategy and future plans to sell bitcoin.

It also said the company securing room to buy back up to $1 billion each of its common shares and preferred shares is a step that increases flexibility in capital allocation.

Formalising bitcoin as a means of securing liquidity is also a key part of the strategy. Strategy introduced a programme that would allow it to sell up to $1.25 billion worth of bitcoin as needed to secure cash. TD Cowen said this is an example of institutionalising bitcoin not simply as a long-term holding but as a flexible funding tool.

The market remains sensitive to the possibility of bitcoin sales. When Strategy sold 32 BTC for about $2.5 million early this month, it said it was a measure to protect preferred shareholders, but it left concerns about the possibility of additional sales.

Market expectations that Strategy will hold more than 1 million BTC by year-end are also easing. Prediction market Myriad reflects the probability at 14 percent, down from 17.5 percent a week earlier.

As bitcoin prices and the stock continue to fall, the market is watching whether Strategy can restore investor confidence and prove long-term financial stability through the new capital management framework.