JPMorgan Tells Saylor: Stack Sats, Not Sales 🙏

JPMorgan said Strategy's new policy permitting selective bitcoin sales to fund preferred stock dividends has introduced avoidable "two-way" risk into crypto markets, adding uncertainty and volatility around the asset. The Wall Street bank argued the company should hold cash reserves covering 24 to 36 months of dividend obligations, well above its current 17-month buffer of $2.55 billion, and should build that war chest by issuing common equity even if those shares trade at a discount to net asset value.

Earlier this week, Strategy formalized a policy allowing bitcoin sales to support preferred dividend payments when appropriate, alongside authorizations for preferred stock repurchases and share buybacks as part of a broader capital structure strategy. The company also set a minimum cash reserve target equal to 12 months of preferred dividends and interest expense. JPMorgan's analysts, led by Nikolaos Panigirtzoglou, wrote that a higher coverage of 24 to 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."

Strategy remains one of the largest corporate holders and buyers of bitcoin, with 847,363 BTC on its balance sheet, and its accumulation strategy has made the company a major source of demand for the cryptocurrency. Any shift toward selling the digital asset, even occasionally, could influence market liquidity, price dynamics and investor sentiment by introducing a new source of supply, the bank said. JPMorgan noted that bitcoin came under pressure in late May and early June after Strategy disclosed in a June 1 regulatory filing that it sold 32 BTC between May 26 and May 31 to fund dividend payments, compounding market weakness.

Demand for U.S. spot bitcoin exchange-traded funds, the largest source of institutional crypto buying since their 2024 debut, has weakened sharply in recent months. The funds saw a record $4 billion in net outflows in June after a 13-day redemption streak pushed year-to-date flows into negative territory for the first time. JPMorgan added that broader crypto sentiment could improve if Strategy expands its reserves and if Congress passes market structure legislation. Bitcoin was trading at $61,890.03 at the time of reporting.