JPMorgan said Strategy's new policy allowing selective bitcoin sales to fund preferred dividends adds a new source of supply to crypto markets, increasing uncertainty and volatility.
Strategy's $2.55 billion cash reserve covers about 17 months of dividend and interest obligations, but JPMorgan said 24-36 months would better reassure investors that bitcoin sales can be avoided.
The concern is amplified by Strategy's scale: it holds about 847,363 BTC—roughly 4% of total supply—and has bought about $13.7 billion of bitcoin this year, around 70% of JPMorgan's estimated net digital-asset inflows.
Bitcoin already came under pressure after Strategy disclosed selling 32 BTC in late May, while U.S. spot bitcoin ETFs posted a record $4 billion of net outflows in June.
JPMorgan said sentiment could recover in the second half if Strategy builds larger cash reserves and Congress passes pending crypto market-structure legislation.
Strategy Inc. has formalized a new policy to sell its Bitcoin holdings as a primary way to build cash reserves, aiming to strengthen its financial position. However, JPMorgan quickly raised concerns, warning that relying on Bitcoin sales introduces avoidable market uncertainty due to the cryptocurrency's inherent volatility. JPMorgan argues that this approach could cause unpredictable swings in Strategy Inc.'s financial outlook and advises the company to consider equity issuance instead, which is seen as a more stable and predictable method for achieving financial stability. This debate highlights the risks of using volatile assets for core funding needs.