JPMorgan warns Strategy's $1.7B dividend bill may force more Bitcoin sales

JPMorgan said Strategy's Bitcoin sales policy introduces avoidable two-way risk into crypto markets, urging the company to boost dollar reserves to 24 to 36 months of dividend coverage.

Bitcoin fell to $61,615 after JPMorgan warned that Strategy's new Bitcoin sales policy creates two-way flow risk, adding to pressure from record ETF outflows.

"Strategy's ability to both buy and sell Bitcoin creates unnecessary two-way flow risk for the market," Nikolaos Panigirtzoglou, an analyst at JPMorgan, said in a Wednesday report. "A higher coverage of 24 to 36 months would be needed to make investors more comfortable."

Strategy sold 32 Bitcoin between May 26 and May 31, generating about $2.5 million at an average price of $77,135, its first disclosed sale since 2022. The company holds 847,363 Bitcoin worth about $52.2 billion, roughly 4% of the total supply. Its current $2.55 billion cash reserve covers about 17 months of preferred dividend and interest obligations.

The warning comes as crypto markets face weakening demand, with U.S. spot Bitcoin ETFs recording a record $4 billion in net outflows in June. JPMorgan assigned less than a 50% probability to the CLARITY Act passing this year, removing a key catalyst for institutional adoption. Bitcoin traded below its estimated $87,000 mining cost, a level that historically signals pressure on miners.

A $1.7 Billion Question

Strategy's annual dividend bill of roughly $1.7 billion has become a central variable for the crypto market's second-half performance, JPMorgan said. The company formalized a policy last week allowing Bitcoin sales to fund preferred dividend payments, while Executive Chairman Michael Saylor had telegraphed the move, saying Strategy would "probably sell some Bitcoin to pay a dividend just to inoculate the market." MSTR shares fell about 7% following the disclosure.

ETF Outflows Deepen Pressure

U.S. spot Bitcoin ETFs saw a record $4 billion in net outflows in June, pushing year-to-date flows into negative territory. Strategy has been the largest single buyer, purchasing roughly $13.7 billion worth of Bitcoin year to date, about 70% of JPMorgan's estimate for total net digital asset inflows. JPMorgan projects Strategy's Bitcoin purchases will reach about $32 billion for the full year 2026, suggesting the bank views the late-May sale as an exception. The analysts said current bearish sentiment could ultimately prove a contrarian bullish signal, with a stronger second half depending on Strategy expanding its cash reserves and the CLARITY Act's fate.

This article is for informational purposes only and does not constitute investment advice.