Strategy sold 32 Bitcoin for approximately $2.5 million between May 26 and May 31, marking the company's first Bitcoin sale since 2022. The Michael Saylor-led firm subsequently revealed it may sell up to $1.25 billion worth of Bitcoin to strengthen its balance sheet as its common and preferred stocks face stress. JPMorgan Chase warned on July 2 that Strategy's new Bitcoin sales policy introduces avoidable 'two-way' risk into crypto markets. The sales decision follows mounting financial pressure on the world's largest Bitcoin treasury company, which maintains a $2.55 billion reserve covering 17 months of preferred dividends and interest obligations.
JPMorgan Warns of Two-Way Market Risk
JPMorgan Chase analysts cautioned that Strategy's decision to allow selective Bitcoin sales increases uncertainty and volatility, CoinDesk reported on July 2. Analysts led by Nikolaos Panigirtzoglou stated the company introduces avoidable 'two-way' flow risk to crypto markets because Strategy is one of the largest Bitcoin buyers, having purchased approximately $13.7 billion worth of the cryptocurrency this year. The analysts noted that whether the firm buys or sells Bitcoin, the movement creates unnecessary risk for the market. They cited Strategy's recent Bitcoin sale as contributing to stress on the cryptocurrency in late May and early June. JPMorgan analysts warned that greater price volatility could increase the cost of raising equity and debt to finance future Bitcoin purchases. The analysts stated Strategy would require a higher coverage of 24-36 months and should issue common equity to further increase dollar reserves, even if this leads to common equity trading at a discount to net asset value. The bank's analysts added that a stronger second half of the year would depend on Strategy expanding its dollar reserves and the U.S. approving the CLARITY Act.
Strategy Stock Performance and Bitcoin Price
Strategy's common stock MSTR is down 34% this year and was trading at $99.93 at press time. The company's Variable Rate Series A Perpetual Stretch Preferred Stock (STRC) is down 12% and was trading at $87.09. Bitcoin is down 30% this year and was exchanging hands at $61,503 at the time of writing, as per Decibel. Strategy revealed it could authorize preferred stock repurchases and share buybacks in the future. The firm disclosed a minimum cash reserve target that could cover 12 months of preferred dividends and interest expense, with its current reserve of $2.55 billion covering 17 months of obligations.
FAQ
What did Strategy sell between May 26 and May 31?
Strategy sold 32 Bitcoin for approximately $2.5 million between May 26 and May 31, marking the company's first Bitcoin sale since 2022.
Why did JPMorgan warn about Strategy's Bitcoin sales policy?
JPMorgan Chase warned on July 2 that Strategy's new Bitcoin sales policy introduces avoidable 'two-way' risk into crypto markets because the company is one of the largest Bitcoin buyers, and its buying or selling movements create unnecessary flow risk that increases market uncertainty and volatility.
