JPMorgan Highlights Market Pressure From Strategy’s Bitcoin Selling Framework

JPMorgan said Strategy’s approach of funding preferred dividend payments through selective bitcoin sales creates avoidable uncertainty in crypto markets and should instead be replaced with equity issuance to strengthen cash reserves.

The Wall Street bank (JPM) argued that Strategy’s (MSTR) decision to allow periodic sales of bitcoin BTC $61,877.79 to cover dividend obligations has introduced unnecessary “two-way” risk, increasing volatility and reducing predictability across the market.

Earlier this week, Strategy formalized a policy permitting bitcoin sales when needed to meet preferred dividend payments, alongside approvals for share buybacks and preferred stock repurchases. It also set a liquidity target equal to 12 months of dividend and interest obligations, with its $2.55 billion cash reserve currently covering about 17 months.

JPMorgan analysts, led by Nikolaos Panigirtzoglou, said a stronger buffer of 24–36 months would be more appropriate. They suggested this could be achieved through additional common equity issuance to boost cash holdings, even if it results in the stock trading at a discount to net asset value.

Strategy remains one of the largest corporate bitcoin holders, with 847,363 BTC on its balance sheet. Its scale has made it a major driver of institutional demand, meaning even limited selling could influence liquidity, pricing, and sentiment by introducing a new source of supply.

Meanwhile, demand from U.S. spot bitcoin ETFs—the dominant institutional inflow channel since their 2024 launch—has weakened sharply, with $4 billion in net outflows in June after a prolonged redemption streak pushed year-to-date flows into negative territory.

JPMorgan also noted that bitcoin came under pressure in late May and early June after Strategy disclosed it sold 32 BTC between May 26 and May 31 to fund dividend payments. That selling added to broader weakness tied to shifting Federal Reserve rate expectations, which also weighed on bitcoin and gold.

The bank highlighted Strategy’s outsized footprint in the market, estimating it has purchased about $13.7 billion worth of bitcoin year-to-date—roughly 70% of total net digital asset inflows—and now holds around 4% of total supply.

Given its size, JPMorgan said Strategy’s dual role as both a major buyer and occasional seller creates unnecessary “two-way flow” risk that could amplify volatility. It also warned that higher volatility could raise capital-raising costs for future bitcoin purchases.

While current bearish sentiment could eventually turn into a contrarian bullish signal, JPMorgan said a stronger second half would likely depend on Strategy building larger cash buffers and progress on U.S. crypto market structure legislation.