JPMorgan Says Strategy’s Bitcoin Monetization Program Adds A Layer Of Market Uncertainty And Volatility - Blockzeit
JPMorgan stated that Strategy’s new role as both a buyer and seller ofBitcoinpresents a two-way risk to the crypto market. Investors hate uncertainty. It makes it hard to predict where the market is going and. . .
JPMorgan stated that Strategy’s new role as both a buyer and seller ofBitcoinpresents a two-way risk to the crypto market. Investors hate uncertainty. It makes it hard to predict where the market is going and turns a calculated risk into more of a roll of the dice than a strategic play. JPMorgan has recentlycriticizedStrategy (MicroStrategy) for introducing an “avoidable two-way risk” into the crypto market through its newDigital Credit Capital Framework. Analysts argued that the company’s decision to become both a buyer and a seller of Bitcoin simultaneously has added a new layer of uncertainty and volatility to the market. JPMorgan Considers Strategy’s Bitcoin Monetization Program a Bad IdeaOn Monday, instead of announcing a new Bitcoin purchase following its usual cryptic post on Sunday, Strategy just proved what everyone feared. Itssale of 32 BTClast month has turned out to be a precursor to its gradual offloading of the asset. Strategy’s new Digital Credit Capital Framework comes with a new BTC monetization program. It essentially allows the company to sell its Bitcoin holdings at its discretion. The proceeds can be used to replenish its cash reserves, pay dividends to investors, settle interest payments on preferred shares, and fund share repurchases. For Nikolaos Panigirtzoglou, a Managing Director of Global Strategy at JPMorgan, Strategy’s major position in the Bitcoin market means it’s no longer just a passive participant. Instead, it’s capable of driving trends and sentiment. With that, Strategy’s introduction of the possibility of selling its Bitcoin holdings at any time presents an “avoidable two-way risk. ” Panigirtzoglou explained that the company could have avoided introducing such an element if it had only issued equity to rebuild its reserves for future dividend payments. Additionally, the JPMorgan strategist highlighted that Strategy should have established a higher coverage of 24-36 months for dividend payments by issuing common equities. He claimed that even if it would lead to MSTR trading at a discount to its NAV (Net Asset Value), it would make investors more comfortable with the thought that it doesn’t need to sell any of its BTC holdings in the foreseeable future. Strategy’s Bitcoin PortfolioTo date, Strategy remains the world’s largest Bitcoin treasury company. It currently holds847,363 BTC, accounting for 4. 23% of the coin’s 20. 04 million circulating supply. The business has even surpassed BlackRock’s Bitcoin holdings of 811,291 BTC as backing assets for the iShares Bitcoin Trust ETF (exchange-traded fund). Strategy has already allocated $64. 07 billion to its Bitcoin treasury. It translates to an average purchase cost of around $75,651, which remains above the asset’s price of $59,532. 32 to $62,117. 87 over the last 24 hours. What’s your Reaction?+12+10+10+10+11+10+12Giancarlo PerlasGiancarlo is an economist by profession with a career spanning nearly two decades. His professional journey has seen him assume vital roles in various government and private organizations such as the Department of the Interior and Local Government (DILG), the National Economic and Development Authority (NEDA), Megaworld Corporation, and the China Banking Corporation in the Republic of the Philippines. In addition to his civic and corporate pursuits, his forward-thinking approach has led him to manage several prominent websites in the banking and finance sector, notably the Australia-based RateChoice, where he immersed himself in the world of emerging financial technologies and where he found particular interest in Bitcoin all the way back to 2013. Prior to his addition to Blockzeit’s dynamic team, he held an essential role as Project Manager for initiatives encompassing blockchain, tokenization, stablecoin, mining, special economic zone development, and iGaming. This noteworthy chapter in his career unfolded under the auspices of InPlan Consultancy Services, Inc. , the think-tank of IMPERO Consortium Management Corporation headquartered in Manila, Philippines, and Tokyo, Japan. InPlan, led by a distinguished retired Cabinet member of the Philippines, collaborates directly with IMPERO's core management team, contributing to strategic planning and business development endeavors.