Strategy has always been known as the buy-and-hold Bitcoin giant. That reputation is now being questioned.
JPMorgan released a report warning that Michael Saylor’s financing overhaul at Strategy Inc. has changed the dynamics of the Bitcoin market. The bank says the move has turned one of Bitcoin’s biggest buyers into a potential seller — and that’s making investors nervous.
Strategy’s common stock jumped around 20% after the financing overhaul was announced on Monday. But the stock is still down around 75% over the past year.
Bitcoin rose for a second straight day on Thursday, climbing as much as 3.4% to $62,127. The move was driven largely by a softer-than-expected US jobs report, which pushed short-dated bond yields lower.
On Monday, Strategy announced what it’s calling the BTC Monetization Program. The plan gives the company the ability to sell up to $1.25 billion worth of Bitcoin to replenish its cash reserves, fund preferred stock dividends, cover interest expenses, and buy back securities.
The company also set a minimum cash reserve target covering at least 12 months of preferred dividends. Its current reserve sits at around $2.55 billion, which covers roughly 17 months of obligations.
JPMorgan’s analysts, led by managing director Nikolaos Panigirtzoglou, say that’s not enough. They argue Strategy needs reserves covering 24 to 36 months to convince investors it won’t have to tap its Bitcoin holdings.
“We believe a higher coverage of 24–36 months would be needed to make investors more comfortable with the idea that Strategy would not need to sell bitcoins in the foreseeable future,” the analysts wrote.
Strategy is the largest corporate holder of Bitcoin. It owns roughly 4.2% of the total Bitcoin supply. This year alone, the company has been responsible for around 70% of estimated net digital asset flows, buying approximately $8.2 billion to $13.7 billion worth of the cryptocurrency.
That scale means any signal of potential selling has an outsized effect on the market. When Strategy disclosed the sale of just 32 Bitcoin — worth $2.5 million — on June 1, it helped trigger a month-long decline that pushed Bitcoin down more than 50% from its all-time high.
JPMorgan’s analysts described the situation bluntly: “The possibility that Strategy would be selling bitcoins introduces two-way risk into crypto markets, inducing more uncertainty and volatility for bitcoin prices that could have been avoided.”
Strategy’s preferred shares have also come under pressure. Its Stretch preferred shares were trading at around $87.50 on Thursday — still below the $100 par value needed to issue new securities at a profit.
The JPMorgan report noted that a stronger second half for crypto markets will also depend on Congress passing the US market structure bill, known as the Clarity Act. If both conditions are met — stronger reserves and legislative progress — analysts said current weak sentiment could prove to be a contrarian buying signal.
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