JPMorgan: Strategy May Need to Rebuild Dollar Reserves

Michael Saylor's Strategy (formerly MicroStrategy) may need to rebuild its dollar reserves to restore investor confidence and reduce concerns about future bitcoin sales, according to JPMorgan analysts, who have now turned "cautious" on digital assets. Because nothing says crypto confidence like a JPMorgan downgrade.

Strategy's recent decision to sell 32 bitcoin "spooked" markets even if the sale was "symbolic and voluntary," intended to demonstrate the company's commitment and flexibility to preferred stockholders, JPMorgan analysts led by managing director Nikolaos Panigirtzoglou said in a report titled Alternative Investments Outlook and Strategy published Friday. Thirty-two coins: small in dollar terms, large in hand-wringing.

The analysts said Strategy's current dollar reserves cover only about 6.3 months of dividend payments, adding to investor concerns. A little under two-thirds of a year of cushion is apparently not the comfort blanket shareholders had in mind.

"In our opinion a rebuilding of the company's dollar reserves might be needed to restore confidence and reduce investor concerns that the company would sell more bitcoins to cover dividend payments," the analysts said. The classic crypto dilemma: selling the asset to pay the bills.

In December, Strategy established a $1.44 billion U.S. dollar reserve to safeguard dividend payments on its preferred stock and service interest on outstanding debt. A war chest that, six months later, looks slightly less chest-like.

Earlier Sunday, Saylor, Strategy's co-founder and executive chairman, instead hinted at a fresh bitcoin buy, posting on X: "A good time to add more dots." The dots, as always, do the talking.

Strategy currently holds 843,706 bitcoin at an average cost of $75,699, representing a paper loss of about $11.5 billion at current prices. An eleven-figure paper headache, served quarterly.

The JPMorgan analysts also expect Strategy to continue buying bitcoin. If its year-to-date pace continues, it would imply around $32 billion of bitcoin purchases in 2026, compared with roughly $22 billion in both 2025 and 2024, the analysts said, revising their estimate from $30 billion last month. The bid is the strategy.

Overall, the analysts said a positive second half of the year would be conditional on Strategy clarifying its strategy for meeting dividend payments of $1.7 billion a year and the passage of the crypto market structure bill, or Clarity Act. Two big ifs, neatly bundled.

JPMorgan sees less than 50% chance of crypto bill passing this year. But the analysts now see less than a 50% chance of the bill passing this year. Earlier this week, they said the legislation may have only a narrow window for passage as U.S. midterm elections approach, the stablecoin yield debate continues and key hurdles remain. Washington runs on calendar awareness, barely.

Overall, the analysts have now turned cautious on digital assets. In an earlier Alternative Investments Outlook and Strategy report published in February, they said they were "overweight" and "positive" on digital assets for 2026 as they expected a further rise in crypto flows led by institutional investors rather than retail investors or digital asset treasury companies.

The rebound in institutional flows they projected was expected to be supported by the passage of additional crypto regulations, including the Clarity Act. Institutions, as ever, waiting for the paperwork.

The analysts also noted that bitcoin has spent most of this year trading below their estimated production cost, another factor behind their more cautious stance. Miners, regrettably, also have bills.

Their central bitcoin production cost estimate fell from $90,000 at the start of the year to $77,000 as hashrate and mining difficulty declined, before rebounding to about $87,000 more recently. A cost estimate that moves more than the asset itself.

Historically, the analysts said bitcoin's production cost has tended to act as a "soft floor," or support level, for the bitcoin price. Soft, as floors go.

Bitcoin is currently trading at around $62,000. Which is below the soft floor, and therefore awkward.

The analysts also pointed to weaker capital flows into digital assets this year. They estimate total digital asset inflows at around $22 billion year-to-date, implying an annualized pace of roughly $52 billion, about half the level seen in 2025. Half the flow, twice the fretting.

The estimate includes crypto fund flows, CME futures positioning, crypto venture capital fundraising and corporate treasury purchases of digital assets, including Strategy's bitcoin acquisitions. A wide net, with Strategy somewhere in the middle of it.

'Bullish contrarian signal going forward' Despite turning cautious, the analysts said the current weak sentiment in crypto markets might prove a "bullish contrarian signal going forward." When everyone is uncomfortable, someone, somewhere, is taking notes.