JPMorgan has issued a warning regarding MicroStrategy’s recent decision to adopt a new Bitcoin sales policy, suggesting it could introduce unnecessary risk into the already volatile cryptocurrency market. This comes against the backdrop of the company led by Michael Saylor, which is considering selling as much as $1.25 billion worth of Bitcoin to fund preferred dividends in the coming months.
The cautionary remarks come as MicroStrategy, now rebranded as Strategy, faces declining values for its common and preferred stocks amid broader financial market pressures. Analysts at JPMorgan, led by Nikolaos Panigirtzoglou, pointed out that the new policy creates a two-way risk, meaning that price fluctuations in either direction can lead to potential losses for those invested in the underlying asset.
As Strategy revealed its plan to bolster its balance sheet through Bitcoin sales, the company also mentioned a potential for preferred stock repurchases and share buybacks. This strategic shift follows a challenging period for both its common shares and its preferred series, highlighted by a new minimum cash reserve target intended to cover a full year of preferred dividends and interest expenses. Currently, the firm has $2.55 billion in reserves, which is sufficient for 17 months of obligations but offers limited flexibility for upcoming quarters.
JPMorgan has advised that Strategy should aim for a more robust coverage target of 24 to 36 months. The bank has also suggested that issuing common equity could enhance dollar reserves, thereby reassuring investors that the company would be less likely to need to sell off Bitcoin in the future.
As the largest Bitcoin holder globally, having acquired approximately $13.7 billion worth of Bitcoin in just 2026, Strategy currently holds 847,363 BTC. The implications of buying or selling Bitcoin have become critical, potentially creating significant flow risks in the broader crypto market.
The company’s previous Bitcoin sale in May sent ripples through the market; it divested 32 Bitcoin for roughly $2.5 million between May 26 and May 31. This marked a notable shift from Saylor’s previous stance of “never selling,” and the bank highlighted the immediate market impact of this transaction. It was noted that this sale contributed to Bitcoin’s tumult in late May and early June, and increased price volatility could further complicate the company’s financial operations, possibly raising the costs of future equity and debt financing.
Currently, MicroStrategy’s stock (MSTR) has plunged 34% this year to $100.77, while its preferred series, STRC, has seen a decline of 12%, now at $87.09. Bitcoin has also faced pressures, dropping 30% year-to-date to $61,486.
Despite the challenging landscape, JPMorgan analysts have noted a potential for a contrarian outlook. They suggest that a recovery in the second half of the year could occur if two conditions are met: an expansion in dollar reserves by Strategy and the United States government’s approval of the CLARITY Act, which could lead to a surge in institutional investment flows.
