For a while now, the Michael Saylor Method has been criticized. Now, big players like JPMorgan are starting to issue warnings. In fact, the giant bank recently called Strategy a Bitcoin trading plan.
In terms of strategy, the long-term strategy relies on a straightforward business model: Raise money through debt and donations, then use that money to buy more Bitcoin (BTC).
As a result, the number of circulating assets was closed instead of trading due to its huge wealth of 847,363 BTC. However, the company’s latest innovation is changing this.
Strategy’s new game plan is raising red flags
In order to pay dividends on preferred stocks or other financial investments, Strategy now allows itself to sell a minimum of Bitcoin. At the same time, it approved the repurchase of its preferred stock and launched a $1 billion stock buyback program.
Although the company’s cash reserves of about $2.55 billion cover about 17 months of preferred dividends and interest, JPMorgan thinks This reserve is still not enough to completely prevent the possibility of future Bitcoin trading.
A group led by Nikolaos Panigirtzoglou argued,
A significant learning period of 24-36 months will be required (by providing common funds to increase dollar reserves even if this will result in trading at a lower price to NAV) so that investors will be comfortable with the idea that the Strategy will not want to sell bitcoins in the future.
What is the real problem?
The big issue is the rise of what JPMorgan calls the “two-way threat.”
In the past, Strategy operated as a Bitcoin buyer, spending every time it received new coins. However, under the new frameworkthe business can switch between buying and selling depending on the amount of money needed.
The fact that Strategy is no longer guaranteed to remove Bitcoin from the market—it can be a resource when money is needed—causes uncertainty.
What’s ahead?
In fact, one of several times the company has sold Bitcoin in working rather than changing history. Although the official sales of $1.25 billion only make up a small part of his total assets, the emotional impact can be greater than the sales volume.
Unfortunately, these changes occur at a time when US Spot Bitcoin ETFs are experiencing withdrawals, and the price of Bitcoin is also struggling.
As of now, the only hope for now is the passage of the CLARITY Act. It has the potential to restore the integrity of the market and the value of Bitcoin, and improve the atmosphere around the Strategy.
Brief Summary
- Instead of an actual warning, JP Morgan has issued a 24-36 month high for the Strategy.
- Although the recent sell-off by Strategy was limited, it still creates fear and uncertainty in the market.
