J.P. Morgan warns Strategy's new Bitcoin sales plan adds "avoidable risk"

J.P. Morgan analysts said Strategy, led by Michael Saylor, has adopted a new Bitcoin selling framework that could shift the firm from a pure BTC accumulator into a potential source of supply, adding what the bank described as a "manageable two-way risk" to the crypto market. The policy, branded the BTC Monetization Program, would allow Strategy to sell Bitcoin to raise as much as $1.25 billion in cash. The proceeds could be used to fund preferred stock dividends and interest costs, or to repurchase preferred or common shares as part of capital structure optimization. J.P. Morgan said any future BTC sales by Strategy could increase uncertainty and price volatility in Bitcoin. The analysts argued the risk was avoidable, suggesting the company could instead rely on equity issuance to support future dividend obligations. Strategy targets a minimum cash balance sufficient to cover 12 months of preferred dividends and interest. Its cash reserves currently stand at $2.55 billion, which J.P. Morgan estimates would cover about 17 months of payments. The bank recommended increasing liquidity to cover 24 to 36 months of these obligations. It said the move could come even if it results in the common stock trading at a discount to net asset value, as a larger buffer would help reassure investors the company is unlikely to be forced into near-term Bitcoin sales. (Source: ODAILY)