Citi's Target Cuts in Crypto Stocks: A Buying Opportunity Amid Valuation Reset?

The recent adjustments to price targets for crypto-related equities by Citigroup have sparked renewed debate about the sector's valuation dynamics. While the cuts reflect a recalibration of expectations amid a challenging macroeconomic environment, they may also signal an opportunity for investors willing to look beyond short-term volatility. This analysis examines whether the current valuation reset in crypto stocks-driven by Citi's revised targets-creates compelling entry points for long-term investors.

The Citi Reassessment: A Sector-Wide Reset

Citigroup's recent revisions to price targets for crypto-linked stocks such as MicroStrategy (MSTR), Riot Platforms (RIOT), Gemini (GEMI), and Bullish (BLSH) underscore a broader recalibration of the sector's perceived value. For instance, MSTR's target was slashed from $485 to $325, while RIOT's fell from $28 to $23, and GEMI's from $16 to $13 according to stocktwits.com. These cuts, however, were not accompanied by downgrades in most cases; Citi maintained a "Buy" rating for MSTR and RIOT and a "Neutral" stance for GEMI, emphasizing that the adjustments reflect evolving assumptions about digital asset valuations rather than deteriorating company fundamentals according to coindesk.com.

The firm's rationale centers on three key factors: the underperformance of Bitcoin in Q4 2025, regulatory uncertainty, and intensifying competition. For example, GEMI's target reduction was attributed to "increasing competitive challenges," while BLSH's cut was linked to slower-than-expected adoption of its hardware solutions according to coindesk.com. Yet, Citi's continued optimism-highlighting Circle Internet (CRCL) as its top pick with a $243 price target-suggests that the bank still views the sector as a long-term growth opportunity according to longbridge.com.

Valuation Metrics: A Tale of Contrasts

To assess whether these price cuts create buying opportunities, it is essential to compare the affected stocks' valuation metrics with industry averages.

1. MicroStrategy (MSTR): Trading at a forward P/E ratio of 3.34x and a market cap of $50.367 billion, MSTR appears exceptionally cheap relative to its peers according to yahoo finance. This low multiple is partly due to its aggressive Bitcoin holdings, which have generated significant unrealized gains. Citi's revised target of $325 implies a 100% upside from its current price of $165, suggesting the market may be underestimating its digital asset exposure according to strategy.com.

2. Riot Platforms (RIOT): With a trailing P/E of 32.92x and an EV/EBITDA of 11.52x, RIOT trades at a premium to the industry average EV/EBITDA range of 9.7x–14.1x according to stockanalysis.com. However, Citi's "Buy" rating highlights its potential to benefit from clearer regulatory frameworks, which could unlock growth in its mining operations according to finance.yahoo.com.

1. Gemini (GEMI): GEMI's P/S ratio of 8.3x exceeds the peer average of 5.2x, indicating a premium valuation relative to revenue according to simplywall.st. While Citi trimmed its target to $13, the firm noted that the new price implies a 45% discount to Coinbase's (COIN) expected 2027 EV/S ratio, suggesting undervaluation if Gemini's growth trajectory aligns with broader industry trends according to coindesk.com.

2. Bullish (BLSH): BLSH's P/E ratio is inapplicable due to net losses, but its P/B ratio of 2.48 suggests the stock is trading at a modest premium to book value according to finance.yahoo.com. Citi's revised target of $67 implies a 52% upside from its current price of $44, reflecting confidence in its institutional adoption and regulatory approvals according to longbridge.com.

3. Circle Internet (CRCL): CRCL's forward P/E of 99.67x and $20.28 billion market cap highlight its premium valuation, driven by the explosive growth of its stablecoin USDC according to finviz.com. Despite Citi's unchanged $243 target, the stock's high multiple raises questions about its near-term sustainability, though its role in facilitating cross-border payments could justify long-term optimism.

The Case for a Valuation Reset

The crypto equity sector's valuation multiples in 2025 are mixed. While broader fintech valuations have trended toward profitability and recurring revenue models, crypto-specific metrics remain polarized. For example, Coinbase's EV/EBITDA of 27.13x according to multiples.vc starkly contrasts with the industry average of 9.7x–14.1x according to firstpagesage.com, suggesting overvaluation in some corners of the market.

Citi's target cuts, however, appear to reflect a more balanced approach. By lowering expectations for individual stocks while maintaining a bullish stance on the sector, the bank is signaling that the current valuation reset is a correction rather than a collapse. For instance, MSTR's forward P/E of 3.34x is arguably a discount to its intrinsic value, given its Bitcoin holdings and strategic positioning in the digital asset treasury model according to strategy.com. Similarly, RIOT's EV/EBITDA of 11.52x aligns with the upper end of industry averages, suggesting it is fairly valued if regulatory clarity materializes.

Risks and Considerations

Investors must remain cautious. Bitcoin's volatility remains a wildcard; a 25% drop in its price could trigger a 61% decline in MSTR's shares according to finance.yahoo.com. Additionally, regulatory risks persist, particularly for firms like GEMI and BLSH, which operate in rapidly evolving legal landscapes. The sector's dependence on macroeconomic conditions-such as interest rates and inflation-also introduces uncertainty.

Conclusion: A Calculated Opportunity

Citi's target cuts for crypto stocks should not be viewed as a bearish signal but rather as a recalibration of expectations in a maturing market. For investors with a long-term horizon, the current valuation reset offers opportunities to acquire undervalued equities in companies with strong fundamentals and growth potential. MSTR and RIOT, in particular, appear attractively priced relative to their peers and industry averages. However, success will depend on navigating regulatory and macroeconomic headwinds while capitalizing on the sector's structural tailwinds.

As the crypto equity market continues to evolve, the key will be distinguishing between temporary dislocations and permanent impairments. For those who can do so, the current environment may present a rare chance to invest in innovation at a discount.