Michael Saylor's Strategy recently formalized its bitcoin sale policy, introducing "avoidable two-way risk" into crypto markets, according to JPMorgan analysts, as the company could now become both a buyer and seller of bitcoin.
"The possibility that Strategy would be selling bitcoins introduces two-way risk into crypto markets, inducing more uncertainty and volatility for bitcoin prices that could have been avoided if it instead issued equity to rebuild reserves for future dividend payments," JPMorgan analysts led by managing director Nikolaos Panigirtzoglou said in a report.
Strategy's bitcoin sale policy, called the BTC Monetization Program, allows the company to sell bitcoin to generate up to $1.25 billion for its cash reserves, fund preferred stock dividends and interest expenses, or conduct preferred stock repurchases and share buybacks as part of capital structure optimization.
The company also announced a minimum cash reserve target covering 12 months of preferred dividends and interest expenses, with its current $2.55 billion cash reserve covering around 17 months of dividends. The JPMorgan analysts said Strategy should instead target enough reserves to cover 24 to 36 months of those obligations.
