JPMorgan: Strategy's BTC sales policy creates unnecessary two-way risk

JPMorgan has analyzed that Strategy's (MSTR) program to monetize its Bitcoin holdings is creating unnecessary two-way risk for the cryptocurrency market, thereby increasing uncertainty and volatility, CoinDesk reported. According to the report, Strategy recently formalized a policy allowing it to sell BTC as needed to cover obligations such as preferred stock dividends. The company also permits buybacks of its preferred and common stock and has set a minimum cash target equivalent to 12 months of preferred dividend and interest expenses. While its current cash holdings of $2.55 billion can cover these obligations for about 17 months, JPMorgan suggests that securing enough cash for 24 to 36 months is necessary to boost investor confidence. The bank argued that expanding dollar reserves by issuing common stock, even at a discount to its net asset value (NAV), would be more desirable than selling BTC. JPMorgan added that with Strategy currently holding about four percent of the total BTC supply, the ability of such an influential company to both buy and sell creates unnecessary risk for the market and could also increase its financing costs in the future.