The launch of the Strategy's Bitcoin reserve sales mechanism has created a "two-sided risk that could have been avoided" for the market. Analysts at JPMorgan noted that the company is now acting as both a buyer and a seller, as reported by The Block.
The bank believes the firm can replenish its reserves through stock issuance rather than by potentially liquidating assets. The mere possibility of such transactions increases uncertainty and volatility, experts emphasized.
The BTC Monetization Program allows Strategy to sell Bitcoin to bolster cash reserves, fund dividends on preferred shares, and cover interest expenses. The program also includes provisions for repurchasing preferred shares and stock buybacks. Through this initiative, the company can raise up to $1.25 billion.
The firm also announced a minimum cash reserve target that should cover 12 months of preferred share dividends and interest expenses. Currently, the reserve stands at $2.55 billion, sufficient for approximately 17 months.
JPMorgan believes the lower threshold should be higher—between 24 to 36 months.
Analysts specifically highlighted the scale of Strategy. The company is considered the largest holder of Bitcoin, owning about 4% of the total BTC supply. This year alone, it has purchased Bitcoin worth $13.7 billion, accounting for 70% of all inflows into the asset, according to the bank's calculations.
The report also noted that Bitcoin has faced significant pressure in recent weeks. JPMorgan linked this to the sale of 32 BTC at the end of May to fund dividend obligations and changing expectations regarding the U.S. Federal Reserve's policy.
Analysts added that the stronger dynamics of the crypto market in the second half of the year will depend on whether Strategy can restore its reserves to cover 24-36 months of dividend obligations and whether the U.S. Congress will approve the CLARITY Act market structure bill. If so, weak sentiment could serve as a "bullish countertrend signal."
It is worth noting that in June, Ripple CEO Brad Garlinghouse criticized Strategy's model, which finances cryptocurrency purchases through the issuance of preferred shares, as harmful to the market.