JPMorgan Flags 'Two-Way Risk' as Strategy Eyes $1.25B Bitcoin Sales

JPMorgan has warned that Strategy's newly adopted framework allowing Bitcoin sales introduces significant flow risk into the broader crypto market. The bank's analysts, led by Nikolaos Panigirtzoglou, say the policy shift by the Michael Saylor-led firm — which could sell up to $1.25 billion in BTC to fund preferred stock dividends — has created a 'two-way risk' dynamic that did not previously exist.

What 'Two-Way Risk' Means for the Market

A two-way risk scenario arises when price movement in either direction can generate losses for participants exposed to the underlying asset. JPMorgan analysts argue that Strategy, historically one of Bitcoin's largest and most consistent buyers, has now become a potential seller — meaning both upward and downward BTC price swings carry market consequences tied to the firm's positioning.

Under the new capital framework, Strategy may also authorize preferred stock repurchases and common share buybacks. The policy shift follows sustained pressure on both MSTR common shares and the company's preferred stock series.

Reserve Coverage and JPMorgan's Recommendations

Strategy has set a minimum cash reserve target aimed at covering 12 months of preferred dividends and interest expenses. The firm currently holds $2.55 billion in reserves, providing approximately 17 months of coverage. JPMorgan pushed back on that target, recommending a more conservative range of 24 to 36 months.

The bank also urged Strategy to issue common equity rather than liquidate Bitcoin holdings in order to expand dollar reserves. Analysts argued this approach would provide greater assurance to investors that forced BTC sales can be avoided going forward.

Key figures from JPMorgan's assessment include:

• Recommended reserve coverage: 24–36 months of obligations
• Current reserve coverage: approximately 17 months ($2.55 billion held)
• Potential Bitcoin sales authorized: up to $1.25 billion
• Strategy's 2026 Bitcoin purchases to date: approximately $13.7 billion
• Total BTC holdings: 847,363 BTC

Market Impact: MSTR Stock and Bitcoin Under Pressure

The concern is not purely theoretical. Between May 26 and May 31, Strategy sold 32 Bitcoin for approximately $2.5 million — its first Bitcoin sale since 2022 and a notable reversal from Saylor's long-held 'never sell' public stance. JPMorgan directly linked that transaction to heightened Bitcoin stress observed in late May and early June.

The bank further noted that increased price volatility could feed back negatively onto Strategy itself, raising the cost of future equity and debt financings — a self-reinforcing risk loop.

As of the time of reporting, MSTR common stock has declined 34% year-to-date, trading at $100.77. The STRC preferred series is down 12% at $87.09. Bitcoin is trading off 30% year-to-date at $61,486.

Conditions for a Potential Second-Half Recovery

Despite the bearish assessment, JPMorgan analysts acknowledged a contrarian scenario in which sentiment reverses in the second half of the year. Two conditions would need to be met simultaneously: Strategy must meaningfully expand its dollar reserve base, and the United States Congress must approve the CLARITY Act to unlock renewed institutional capital flows into the crypto market. Neither condition has been met as of the latest reporting.