The bank indicated that Strategy's approach to bitcoin sales creates unnecessary market volatility and should be replaced with stock issuance to bolster cash reserves.
By Will Canny|Edited by Cheyenne Ligon Jul 2, 2026, 1:11 p.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on Strategy Executive Chairman Michael Saylor at the Digital Asset Summit in New York City on March 20, 2025. (Nikhilesh De, CoinDesk)SummaryShow- JPMorgan noted that Strategy's recent bitcoin sales policy introduces a "two-way" flow risk, amplifying uncertainty in crypto markets.
- The bank suggested that Strategy should maintain cash reserves sufficient to cover 24–36 months of dividend obligations, as opposed to the existing 17-month buffer.
- If Strategy increases reserves and Congress enacts market structure legislation, crypto sentiment could see an uptick.
JPMorgan (JPM) expressed concerns regarding Strategy's (MSTR) recent decision to permit selective bitcoin BTC$61,833.50 sales to fund preferred stock dividends, stating that it brings about unnecessary "two-way" risk to the crypto market, thus heightening volatility.
This past week, Strategy established a policy that allows the sale of bitcoin to support preferred dividend payments when deemed appropriate. This policy also includes provisions for preferred stock buybacks and share repurchases as part of a larger capital strategy. The company has set a minimum cash reserve target that equals 12 months of preferred dividends and interest expenses. Currently, its $2.55 billion in reserves is adequate for about 17 months of obligations.
However, JPMorgan analysts believe a more extensive reserve coverage of 24-36 months is necessary (possibly via issuing common equity to boost reserves, even if it results in common equity trading at a discount to NAV) to reassure investors that Strategy would not need to liquidate bitcoins in the near future, as stated in a report by Nikolaos Panigirtzoglou.
Strategy has emerged as one of the largest corporate bitcoin holders, boasting 847,363 BTC on its balance sheet. Its aggressive buying approach has positioned the company as a significant driver of demand for bitcoin, meaning any shift towards selling this digital asset could impact market liquidity, pricing, and overall investor sentiment by introducing new supply.
Interest in U.S. spot bitcoin exchange-traded funds (ETFs), the primary source of institutional crypto investment since their introduction in 2024, has seen a notable decline recently. The funds recorded a staggering $4 billion in net outflows in June, following a 13-day streak of redemptions that pushed year-to-date flows into negative territory for the first time.
According to JPMorgan, bitcoin faced downward pressure in late May and early June after Strategy revealed in a June 1 regulatory filing that it sold 32 BTC between May 26 and May 31 to fund its dividend payments. These sales intensified the impact of a broader adjustment in Federal Reserve interest-rate expectations that had already negatively affected both bitcoin and gold.
The bank highlighted that under Michael Saylor's leadership, Strategy has become one of bitcoin's major buyers, acquiring approximately $13.7 billion worth of the cryptocurrency this year, which constitutes around 70% of JPMorgan's projected total net inflows into digital assets. The company holds roughly 4% of bitcoin's entire supply.
Given Strategy's scale, the possibility of it both purchasing and selling bitcoin creates unwarranted two-way flow risk for the market, according to JPMorgan analysts. Increased price volatility could ultimately disadvantage the company by raising the costs associated with securing equity and debt for future bitcoin acquisitions.
While the current bearish sentiment could serve as a contrarian bullish indicator, a more robust second half of the year will hinge on Strategy enhancing its cash reserves and U.S. lawmakers approving pending legislation related to crypto market structure, the report concluded.
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