Investing.com -- J.P. Morgan analyst Nikolaos Panigirtzoglou said Thursday that MicroStrategy's new Bitcoin trading strategy that allows the company to sell coins to avoid liquidity crunches introduces additional risks to broader cryptocurrency markets.

Panigirtzoglou said the new policy creates two-way flow risk for Bitcoin and increases uncertainty in cryptocurrency markets. The analyst stated that a higher coverage of 24 to 36 months would be necessary to reassure investors that MicroStrategy would not need to sell Bitcoin in the near future.

Earlier this week, MicroStrategy announced a Digital Credit Capital Framework and authorized a $1.25 billion Bitcoin monetization program, marking a shift from its previous buy-and-hold approach

The company also authorized preferred stock repurchases and share buybacks for capital structure optimization. The firm announced a minimum dollar reserve target of 12 months of preferred dividends and interest expense, with current dollar reserves of $2.55 billion covering approximately 17 months of dividends.

MicroStrategy's $13.7 billion of Bitcoin purchases year-to-date represented around 70% of J.P. Morgan's estimated overall digital asset flow. The company holds 4% of total Bitcoin supply.

The analyst noted that while flexibility to sell Bitcoin for dividend payments would typically be viewed as constructive for most companies, MicroStrategy's position as a major Bitcoin buyer and holder means potential sales introduce uncertainty that could affect the company's valuation and raise the cost of issuing equity and debt for future Bitcoin purchases.

Bitcoin prices declined in late May and early June after MicroStrategy disclosed in a June 1 filing that it sold 32 Bitcoin between May 26 and May 31 to fund dividend distributions to preferred stockholders.