JPMorgan flags “two-way risk” from Strategy’s Bitcoin policy
The world's largest corporate Bitcoin holder sold 32 BTC to cover dividends, and JPMorgan thinks that small move signals a much bigger problem.
JPMorgan warned that Strategy’s new policy allowing selective Bitcoin sales to fund preferred stock dividends could increase crypto market volatility by turning one of Bitcoin’s biggest corporate buyers into a potential seller, according to a report first published by CoinDesk.
The bank said the move would create unnecessary “two-way” market risk by introducing uncertainty over both future purchases and possible sales.
Strategy recently adopted the policy as part of its capital management plan that also authorizes preferred share repurchases and share buybacks.
The company targets cash reserves equal to at least 12 months of preferred dividends and interest expenses and currently holds over $2.5 billion, enough to cover around 17 months. JPMorgan suggested Strategy raise its cash reserves to cover 24 to 36 months of preferred dividend and interest obligations, reducing the likelihood it would need to sell Bitcoin.
According to the bank’s estimates, Strategy has acquired approximately $13.7 billion worth of Bitcoin this year and now holds about 847,363 BTC, representing over 4% of the crypto asset’s total supply.
The bank also highlighted weakening demand for US spot Bitcoin ETFs, which recorded $4 billion in net outflows in June, and said larger cash reserves alongside supportive US crypto legislation could help stabilize market sentiment.