JPMorgan said Strategy’s policy of funding preferred dividend payments through selective bitcoin sales adds unnecessary uncertainty to 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 occasional sales of bitcoin BTC $61,877.79 to support preferred dividends has introduced avoidable “two-way” risk, increasing volatility across crypto markets.
Earlier this week, Strategy adopted a framework permitting bitcoin sales when needed to cover preferred dividend obligations, alongside approvals for preferred stock repurchases and share buybacks. The company also set a liquidity buffer equal to 12 months of dividends and interest expenses, with its current $2.55 billion reserve covering roughly 17 months.
JPMorgan analysts, led by Nikolaos Panigirtzoglou, said a more comfortable level would be a 24–36 month buffer. They suggested this could be achieved through additional common equity issuance to expand cash reserves, even if it results in shares trading below net asset value.
Strategy remains one of the largest corporate bitcoin holders, with 847,363 BTC on its balance sheet. Its aggressive accumulation has made it a key driver of demand, meaning even limited selling could impact liquidity, pricing, and sentiment by introducing a new supply source into the market.
Meanwhile, demand from U.S. spot bitcoin ETFs—the main institutional inflow channel since their 2024 launch—has weakened sharply, with $4 billion in net outflows in June following a 13-day redemption streak that 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 had sold 32 BTC between May 26 and May 31 to fund dividend payments. That selling added to broader weakness driven by shifting Federal Reserve rate expectations, which also weighed on bitcoin and gold.
The bank highlighted Strategy’s outsized influence on 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 scale, 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 the cost of raising capital through equity or debt 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 on progress in U.S. crypto market structure legislation.
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