JPMorgan said Strategy’s method of funding preferred dividend payments through selective bitcoin sales introduces avoidable uncertainty into the market and should instead be replaced with equity issuance to reinforce cash reserves.
The Wall Street bank (JPM) argued that Strategy’s (MSTR) decision to permit periodic bitcoin BTC $61,877.79 sales to meet dividend obligations has created unnecessary “two-way” risk, adding volatility and unpredictability across crypto markets.
Earlier this week, Strategy introduced a framework allowing bitcoin sales when needed to cover preferred dividends, alongside authorization for share buybacks and preferred stock repurchases. The company also set a liquidity target equal to 12 months of dividend and interest obligations, with its $2.55 billion reserve currently covering about 17 months.
JPMorgan’s analysts, led by Nikolaos Panigirtzoglou, said a more conservative buffer of 24–36 months would be preferable. They suggested this could be achieved by issuing additional common equity 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 holders of bitcoin, with 847,363 BTC on its balance sheet. Its large-scale accumulation has made it a key source of institutional demand, meaning even occasional selling could influence liquidity, pricing, and investor sentiment by introducing a new supply channel.
At the same time, demand from U.S. spot bitcoin ETFs—the primary institutional inflow driver since their 2024 launch—has weakened sharply, recording $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 saw renewed 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 activity compounded broader weakness tied to shifting Federal Reserve rate expectations, which also weighed on both bitcoin and gold.
The bank highlighted Strategy’s outsized market influence, estimating it has bought roughly $13.7 billion worth of bitcoin year-to-date—around 70% of total net digital asset inflows—and now holds about 4% of total BTC supply.
Given its scale, JPMorgan said Strategy’s combined role as a major buyer and occasional seller creates unnecessary “two-way flow” risk that could amplify volatility. The bank added that higher volatility could ultimately increase capital-raising costs for future bitcoin purchases.
While current bearish sentiment could eventually prove a contrarian bullish indicator, JPMorgan said a stronger second half would likely depend on Strategy building larger cash buffers and on progress in U.S. crypto market structure legislation.
