JPMorgan Warns Strategy Must Rebuild Cash Reserves to Restore Investor Confidence

Strategy Inc., the corporate Bitcoin giant formerly known as MicroStrategy, is facing a cash crunch that JPMorgan says it must address to prevent investor flight.

The bank's analysts warn that the company's dollar reserves have shrunk to just 6.3 months of dividend coverage, well below the 12-to-24-month target set last December.

Compounding concerns: Strategy sold 32 BTC in late May. Though a tiny fraction of its massive holdings, the move broke the company's 'never sell' narrative and sent a worrying signal to markets.

JPMorgan expects the firm to launch equity offerings to rebuild its cash buffer, rather than risk further Bitcoin sales that could undermine the core investment thesis.

Adding to the bearish outlook, JPMorgan also lowered its probability of the CLARITY Act passing this year to below 50%, removing a key regulatory catalyst for the crypto sector.