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Shares of enterprise software specialist MicroStrategy (NASDAQ:MSTR) are declining on Friday, capping off what is about to be a down week for MSTR stock. This move is reflective of its evolved role as a cryptocurrency proxy, with the digital asset sector also suffering a rough week. Still, Wall Street firm Bernstein is optimistic about both MSTR stock and the broader crypto ecosystem.

According to CoinDesk, Bernstein believes that Bitcoin (BTC-USD) could achieve a multi-fold increase in value over the next decade. Furthermore, per the article, Bernstein pointed out that MicroStrategy now “owns 1.1% of the global supply of the world’s largest cryptocurrency, worth about $14.5 billion.”

Subsequently, Bernstein initiated coverage of MSTR stock with a “buy” rating and a $2,890 price target. According to TipRanks, this forecast implies almost 95% upside from the current value of MicroStrategy shares.

MSTR Stock Becomes a Double-Edged Sword

From the framing of MSTR stock as a crypto proxy, the bullish thesis here makes perfect sense on paper. According to Bernstein analysts Gautam Chhugani and Mahika Sapra, MicroStrategy Chairman and founder Michael Saylor has become synonymous with the crypto and blockchain ecosystem. Therefore, those who are interested in digital assets can instead acquire shares of MSTR.

More to the point, MicroStrategy has become an active leveraged crypto strategy, contrasting sharply with the passive profile of crypto-focused exchange-traded funds (ETFs) that regulators have approved and are continuing to approve. At the same time, this framework may also translate to MSTR stock representing a double-edged sword.

That’s because, while MicroStrategy has been successful — gaining around 115% year-to-date (YTD) and 425% for the past 52 weeks — shares are also reliant on the health of the volatile crypto ecosystem. As Friday’s action is demonstrating, when virtual currencies stumble, the negativity can take down MSTR stock.

Valuation concerns should also be taken into account when it comes to MicroStrategy. At the most optimistic range, analysts anticipate that fiscal 2025 revenue will reach $530.6 million. But MSTR already trades at 51.45 times trailing-year revenue, which is well above the software sector’s median value of 2.24 times.

Assuming a shares outstanding count of 15.77 million, MSTR stock currently trades at over 40 times projected fiscal 2025 sales. That’s a rich premium, and potentially requires a significant surge in cryptos for MicroStrategy to make sense valuation-wise.

On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.