JPMorgan: Strategy's Bitcoin Sales Policy Introduces Two-Way Risk
Miles Bennett
JPMorgan warns that Strategy's formal policy allowing Bitcoin sales to cover preferred-stock dividends creates an avoidable two-way risk — the largest corporate BTC holder, controlling 4% of total supply, can now flip from buyer to seller.
What exactly happened?
Strategy this week formalized a policy allowing it to sell Bitcoin to pay preferred-stock dividends and interest.
It also authorized buybacks of preferred and common shares, and set a minimum cash reserve target — enough to cover 12 months of preferred dividends and interest.
The company currently holds $2.55 billion in cash, covering roughly 17 months of debt obligations.
Is 17 months of cash enough?
JPMorgan analyst Nikolaos Panigirtzoglou's team says no.
The report argues investors need 24 to 36 months of coverage to feel comfortable. This means → even though the war chest looks adequate today, the market still fears a forced sell-off in a downturn.
In plain terms = the cash covers a year and a half, but the market wants a two-to-three-year cushion — the gap is what drives the anxiety.
Closing that gap may require issuing more common stock for dollar reserves, which could push shares to trade at a discount to net asset value.
Why does Strategy's size make the whole market nervous?
Strategy holds 847,363 BTC — roughly 4% of Bitcoin's total supply — making it one of the world's largest corporate holders.
JPMorgan estimates the firm has bought about $13.7 billion in Bitcoin year-to-date, accounting for roughly 70% of estimated net digital-asset inflows industry-wide.
This reflects a structural problem: when a single buyer accounts for 70% of net inflows, any shift toward selling creates a supply shock the market cannot ignore.
Has any actual selling occurred?
Yes. Strategy disclosed in a June 1 regulatory filing that it sold 32 BTC between May 26 and May 31 to cover dividends.
Bitcoin fell under pressure after the disclosure, compounded by a repricing of Fed rate expectations that also dragged on gold.
In plain terms = 32 BTC is a tiny amount, but the signal was large — the market saw a "buy-only" company actually sell for the first time.
Is institutional demand weakening at the same time?
U.S. spot Bitcoin ETFs recorded a record $4 billion in net outflows in June, with redemptions running for 13 consecutive trading days.
Year-to-date cumulative net inflows have been pushed into negative territory. This means → the largest institutional channel for buying crypto since the 2024 approvals is now releasing holdings in reverse.
JPMorgan notes the current bearish sentiment may paradoxically form a contrarian support, but a real second-half reversal depends on two conditions: Strategy further building its cash reserves, and U.S. Congress passing pending crypto market-structure legislation.
Content is for reference only, not financial advice.