[DigitalToday reporter Jinju Hong] JPMorgan has adjusted its view of the cryptocurrency market from its previous optimism to a more cautious stance. It said Strategy, the biggest holder of bitcoin, may need to expand its dollar reserves to secure funds for dividends. It also focused on recent controversy over bitcoin sales that shook the market.

Coinpost, a blockchain outlet, reported on Sunday that JPMorgan said in a recent report that Strategy needs to increase its U.S. dollar reserves to maintain market confidence.

The report follows Strategy's sale of 32 bitcoin in late May. The amount itself was not large, but it raised concerns in the market that the company could sell more bitcoin in the future to pay preferred-share dividends.

JPMorgan assessed that the sale may have been intended to show shareholders the flexibility to convert bitcoin into cash if needed. It also analysed that the move ultimately fuelled investor anxiety.

Strategy currently holds about $871 million in U.S. dollar reserves. That is estimated to cover about 6.3 months of preferred-share dividends. JPMorgan pointed to the possible need to secure additional cash-like assets to ease concerns about dividend-paying capacity and restore market confidence.

Strategy, however, said there has been no change to its bitcoin accumulation strategy. The company said it would continue to increase both its net bitcoin holdings and bitcoin holdings per share even after selling some bitcoin recently, and it hinted at the possibility of additional purchases.

JPMorgan estimated that if the current pace of purchases is maintained, Strategy could buy an additional $32 billion worth of bitcoin in 2026. That would exceed the annual purchase amounts of about $22 billion in 2024 and 2025.

Its outlook for the broader cryptocurrency market has also become more conservative than before. As recently as February, JPMorgan recommended increasing allocation to cryptocurrencies on expectations of greater inflows led by institutional investors. In its latest report, it lowered its market view to a neutral level. It cited delays in processing the CLARITY bill, a U.S. cryptocurrency market-structure measure, along with slowing inflows and a weaker bitcoin price.

JPMorgan estimated that about $22 billion has flowed into the cryptocurrency market so far this year. Annualised, that is about $52 billion, which it analysed would remain at about half of last year's inflows. It also assessed that demand for hedges against inflation and declines in the value of fiat currencies, as well as institutional money, is weaker than before.

JPMorgan said two conditions are needed for a market rebound in the second half. The first is for Strategy to present more clearly its plan to pay about $1.7 billion in annual dividends. The second is passage of the CLARITY bill in the U.S. Congress. JPMorgan estimated the chance of the bill passing within the year at less than 50 percent, and said regulatory uncertainty could persist for some time.

Its assessment of the altcoin market was also conservative. JPMorgan said DeFi has failed to attract institutional investor interest due to security issues and growth that fell short of expectations. It also analysed that major altcoins, including ethereum, would need broader real-economy use and increased network activity to outperform bitcoin.

Ultimately, JPMorgan views uncertainty surrounding dividend funding as a bigger variable than Strategy's bitcoin buying strategy itself. It also said a cautious approach to the broader cryptocurrency market is needed until regulatory progress and a recovery in inflows are confirmed.