JPMorgan: Strategy cash reserves rise to $3 billion; Bitcoin futures inflows send a positive signal

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Deep Tide TechFlow News: On July 18, according to The Block, JPMorgan analysts said Strategy’s recent increase in its U.S. dollar reserves and recorded inflows in the Bitcoin futures market are “encouraging signs” for Bitcoin’s outlook, even though spot Bitcoin ETF flows have still been relatively volatile recently.

The analysts noted that spot Bitcoin ETFs recorded inflows last week but turned to outflows this week. By contrast, leveraged ETFs linked to Strategy have maintained relatively steady net inflows for seven straight weeks. JPMorgan believes this segment of buying is mainly driven by retail investors, which could provide support for Strategy’s share price and help keep its common stock from falling below the net asset value of the company’s Bitcoin holdings.

Strategy recently increased its U.S. dollar reserves from $2.55 billion to $3 billion, equivalent to about 20 months of preferred stock dividend payments. JPMorgan previously said that if the company can hold enough cash to cover 2 to 3 years of preferred stock dividend payments, it would help ease market concerns about the possibility that it may sell Bitcoin in the future to pay dividends.

The analyst emphasized that it is currently difficult to determine whether Strategy’s increased cash reserves have directly improved Bitcoin investors’ sentiment. However, while spot Bitcoin ETFs saw outflows, the Chicago Mercantile Exchange Bitcoin futures and perpetual futures still recorded net inflows this week, indicating that demand in the futures market led by institutional investors has improved.

Strategy President and CEO Phong Le previously said the company still plans to buy Bitcoin long term and hopes to remain the largest Bitcoin buyer in the market in the foreseeable future. The company also plans to issue further shares after STRC preferred stock rebounds to a par value of $100 per share; the proceeds may be used to buy Bitcoin and increase its U.S. dollar reserves.

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