JP Morgan thinks Strategy’s Bitcoin sales policy is a ‘two-way risk’ – Details!

ambcryptoPublished on 2026-07-04Last updated on 2026-07-04

Abstract

JPMorgan has raised concerns about MicroStrategy's revised Bitcoin strategy, labeling it a 'two-way risk'. The company, long known for aggressively buying and holding Bitcoin using raised capital, has now formally authorized limited Bitcoin sales to cover financial obligations like preferred stock dividends. While its current cash reserves cover about 17 months of costs, JPMorgan analysts argue a 24-36 month buffer is needed to reassure investors that future Bitcoin sales are unlikely. This shift introduces uncertainty, as MicroStrategy is no longer a guaranteed net buyer and could become a source of Bitcoin supply. The psychological impact of this policy change is significant, occurring amid net outflows from U.S. Spot Bitcoin ETFs and price struggles. The article suggests hope may lie in the potential approval of the CLARITY Act to restore market stability.

For a while now, Michael Saylor’s Strategy has been on a wild ride of criticism. Now, major players like JPMorgan are beginning to issue some warnings. In fact, the banking giant recently called out Strategy’s Bitcoin sales policy.

For context, Strategy has long relied on a straightforward business model: Raise capital through debt and equity offerings, then use that money to purchase additional Bitcoin [BTC].

As a result, a sizeable amount of the circulating supply was essentially locked away rather than actively traded due to its enormous treasury of 847,363 BTC. However, the company’s most recent capital structure is now altering that dynamic.

Strategy’s new game plan raises red flags

To pay dividends on its preferred stock or other financial commitments, Strategy has now formally permitted itself to sell a limited quantity of Bitcoin. At the same time, it authorized preferred stock repurchases and launched a $1 billion common stock buyback program.

Even though the company’s cash reserves of about $2.55 billion cover about 17 months’ worth of preferred dividends and interest costs, JPMorgan thinks this buffer is still insufficient to completely rule out the possibility of future Bitcoin sales.

The team led by Nikolaos Panigirtzoglou argued,

A higher coverage of 24-36 months would be needed (by issuing common equity to further increase dollar reserves even if this leads to the common equity trading at a discount to NAV) to make investors more comfortable with the idea that Strategy would not need to sell bitcoins in the foreseeable future.

What is the underlying issue?

The primary issue is the rise of what JPMorgan refers to as “two-way risk.”

In the past, Strategy operated virtually solely as a Bitcoin buyer, continuously consuming supply whenever it raised new funds. However, under the new framework, the business can switch between buying and selling based on how much cash it needs.

The fact that Strategy is no longer assured of removing Bitcoin from the market—it might even turn into a source of supply when money is needed—introduces uncertainty.

What’s ahead?

In fact, in one of the few times the company has sold Bitcoin for operational rather than portfolio adjustments. Even though the $1.25 billion authorized sale capacity only makes up a small portion of its total holdings, the psychological impact could be far greater than the volume of sales.

Unfortunately, these shifts occur at a time when the U.S. Spot Bitcoin ETFs are facing net withdrawals, and the price of Bitcoin is also struggling.

Henceforth, the only hope at this point is the approval of the CLARITY Act. It has the potential to restore market integrity and the price of Bitcoin, in turn improving the air surrounding Strategy.


Final Summary

  • Instead of an actual warning, JP Morgan has suggested a higher coverage of 24-36 months for Strategy.
  • Though the recent sell-off by Strategy was minimal, it has still induced fear and uncertainty in the market.

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Related Questions

QWhat did JPMorgan identify as the main problem with MicroStrategy's new Bitcoin sales policy?

AJPMorgan identified the main problem as the introduction of a 'two-way risk'. Previously, MicroStrategy was consistently a Bitcoin buyer, absorbing supply. Now, under its new policy, the company can switch between buying and selling depending on its cash needs, creating uncertainty as it is no longer assured of removing Bitcoin from the market and could become a source of supply.

QWhat specific financial buffer did JPMorgan suggest would make investors more comfortable regarding MicroStrategy's Bitcoin holdings?

AJPMorgan suggested that a higher cash reserve coverage of 24-36 months for preferred dividends and interest costs would be needed to make investors more comfortable with the idea that MicroStrategy would not need to sell Bitcoin in the foreseeable future.

QAccording to the article, what is the potential impact of MicroStrategy's authorized Bitcoin sales, even if the amount is small?

AAccording to the article, even though MicroStrategy's authorized sale capacity of $1.25 billion is a small portion of its total holdings, the psychological impact on the market could be far greater than the actual volume of sales, inducing fear and uncertainty.

QWhat recent change in MicroStrategy's capital structure is altering its role in the Bitcoin market?

AThe recent change is that MicroStrategy has formally permitted itself to sell a limited quantity of Bitcoin to pay dividends on its preferred stock or meet other financial commitments. This, along with authorized stock repurchases, means the company is no longer a guaranteed net buyer and can now be a seller.

QWhat does the article suggest could help improve the market situation for Bitcoin and MicroStrategy?

AThe article suggests that the approval of the CLARITY Act has the potential to restore market integrity and the price of Bitcoin, which in turn could improve the sentiment surrounding MicroStrategy.

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