JPMorgan says Strategy's bitcoin sales policy adds 'two-way risk' to crypto markets
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- JPMorgan said Strategy's bitcoin sales policy introduces avoidable "two-way" flow risk, adding new supply uncertainty to crypto markets.
- Strategy formalized a policy allowing selective BTC sales to fund preferred dividends, plus preferred stock repurchases and buybacks, with a 12-month minimum cash reserve target; its current $2.55 billion covers roughly 17 months of obligations.
- JPMorgan argued Strategy needs 24–36 months of coverage—achievable by issuing common equity even at a discount to NAV—to convince investors it won't need to sell bitcoin in the foreseeable future.
- Strategy holds 847,363 BTC (about 4% of total supply) and has purchased roughly $13.7 billion year-to-date, accounting for about 70% of JPMorgan's estimated total net digital asset inflows.
- Bitcoin came under pressure in late May and early June after Strategy disclosed selling 32 BTC between May 26 and May 31 to fund dividend payments, compounding pressure from a Federal Reserve rate-expectations repricing.
- U.S. spot bitcoin ETFs saw a record $4 billion in net outflows in June after a 13-day redemption streak, pushing year-to-date flows into negative territory for the first time.
- JPMorgan said a stronger second half for crypto hinges on Strategy expanding cash reserves and Congress passing pending market structure legislation, adding that current bearish sentiment could prove a contrarian bullish signal.
Why it matters: Strategy controls roughly 4% of all bitcoin in circulation and accounts for an estimated 70% of net digital asset inflows year-to-date, so a policy shift from buyer to occasional seller adds real supply pressure on top of record $4 billion ETF outflows in June. JPMorgan's prescription—raising cash through equity issuance at a potential NAV discount rather than BTC sales—forces a direct tradeoff between shareholder dilution and continued bitcoin accumulation, with the 17-month buffer falling short of the 24–36 months the bank argues is needed for market comfort.
