JPMorgan has issued a stark warning that Strategy Inc. (formerly MicroStrategy) is introducing "two-way flow risk" into the Bitcoin market by formalizing the ability to sell its massive BTC holdings. The banking giant's analysis comes after Strategy authorized a mechanism to sell up to $1.25 billion in Bitcoin if necessary to cover its preferred stock dividend obligations.
Historically, the company was regarded as a "black hole" for Bitcoin, absorbing supply with near-continuous buying. However, a newly adopted Digital Credit Capital Framework has transformed Strategy from a permanent buyer into a potential intermittent seller. As Strategy now owes approximately $1.2 billion per year in preferred dividends—while its software business generates minimal profit—its current $2.55 billion cash reserve covers roughly 17 months of payments.
JPMorgan argues that maintaining cash reserves for 24 to 36 months is necessary to boost investor confidence. The bank suggests raising capital through common equity offerings, even at a discount to net asset value, rather than liquidating Bitcoin. With Strategy controlling roughly 4% of the total BTC supply and accounting for roughly 70% of net digital asset inflows this year, the new flexibility could undermine market support. The mere existence of the sell option, JPMorgan contends, creates unnecessary uncertainty that may increase volatility and future financing costs.
The options market reflects this anxiety. Greeks.live analyst Adam noted that a large gamma concentration sits around $60,000, with put options clustered between $55,000 and $60,000. A break below $55,000, he warned, could significantly accelerate a sell-off. The overall downside risk, he added, is compounded by macroeconomic uncertainty and outflows from U.S. ETFs.
