JPMorgan: Strategy cash reserves increase releases a positive signal; Bitcoin futures demand improves in tandem

BlockBeats, July 17—JPMorgan analysts said in a recent report that Strategy has recently increased its dollar reserves from $2.55 billion to $3.0 billion, which is enough to cover about 20 months of preferred stock dividend payments—an encouraging signal for the outlook for Bitcoin. If Strategy can rebuild its dollar reserves to a level that covers two to three years of dividends, it would ease market concerns that it might be forced to sell Bitcoin in the future to pay preferred dividends. Meanwhile, despite highly volatile recent flows into spot Bitcoin ETFs, both Chicago Mercantile Exchange Bitcoin futures and perpetual contracts recorded net positive inflows this week; such flows are typically driven by institutional investors rather than retail traders, contrasting with the outflows from spot ETFs.

In addition, the leveraged ETFs linked to Strategy have seen relatively stable capital flows over the past seven weeks and have remained positive, driven mainly by retail buying. This provides support for Strategy’s common stock price, helping it avoid falling below the asset net asset value backed by its Bitcoin holdings. Earlier this week, Phong Le, President and CEO of Strategy, made it clear that the company’s balance sheet is very safe; they would only begin to worry about debt-related risks if Bitcoin drops to the $8,000 to $10,000 range. He also said the company plans to issue more after STRC preferred stock returns to the $100 par value to further increase its Bitcoin holdings and expand its dollar reserves.

JPMorgan also reiterated that Strategy is not the main structural threat facing Bitcoin—greater risk lies in promoting blockchain technology through a permissioned system, which is not beneficial for public chains or their tokens.