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Key Takeaways
- CryptoQuant urged Strategy to pause bitcoin purchases and rebuild its cash reserve after STRC fell to a record low roughly 17.5% below par.
- Annual dividend obligations have nearly quadrupled to $1.2 billion while cash reserves have shrunk 38% since January.
- All bitcoin purchased between 2024 and 2026 is estimated to be underwater, with $10.6 billion in unrealized losses at current prices.
Onchain analytics firm CryptoQuant published a report Wednesday urging Strategy to pause bitcoin purchases and rebuild its cash reserve before resuming accumulation. In CryptoQuant’s view, STRC stress suggests Strategy has overextended itself, with the firm’s dividend coverage collapsing from more than seven years to about 14 months, according to the report.
STRC Falls to Record Low as Dividends Quadruple and Cash Shrinks
STRC fell to a record low near $82.50 last week, about 17.5% below the $100 par level it is designed to trade around. The stock currently yields 11.5%, and its slide came as bitcoin’s price correction and a shrinking cash reserve hit simultaneously.
Strategy’s annual dividend obligations have nearly quadrupled from about $300 million at the start of 2026 to $1.2 billion now, driven by continued issuance of STRC to fund bitcoin purchases. At the same time, the company’s cash reserve has fallen 38% since January.
CryptoQuant said a significant portion of that decline came from Strategy’s $1.5 billion repurchase of its 0% convertible notes due 2029 in May, which drained the buffer supporting STRC dividends.
The result is a coverage ratio that has deteriorated sharply. CryptoQuant head of research Julio Moreno estimated that Strategy would need approximately $2.8 billion in cash, equivalent to roughly 24 months of coverage, to restore STRC to health.
The company reported a reserve of about $1.1 billion in mid-June, before raising it to approximately $1.4 billion through a $300 million infusion the week of June 22.
Strategy Sits on $10.6 Billion in Unrealized Losses With No Easy Exit
CryptoQuant identified a second constraint limiting Strategy’s options. In Moreno’s view, all bitcoin purchased between 2024 and 2026 is currently underwater, leaving the company with an estimated $10.6 billion in unrealized losses against an average acquisition cost of roughly $75,000 per coin.
“Any forced BTC sale at current prices would crystallize large losses and destroy shareholder value,” CryptoQuant said in the report.
CryptoQuant argued that Strategy is not required to sell bitcoin to defend STRC, and can instead raise the dividend rate or issue additional MSTR common stock to signal payment capacity, tools it is already using.
In Moreno’s view, STRC’s cumulative dividend structure means any skipped payments must be made up later, making suspension unlikely given the damage it would do to Strategy’s credibility with the preferred holders it depends on for future capital raises.
CryptoQuant Says Strategy Needs $2.8 Billion in Cash Before Buying Again
The firm’s prescription is a pause on bitcoin purchases until the reserve is rebuilt, followed by a more systematic purchase framework. Moreno argued that buying whenever capital is raised has reinforced the market perception that Strategy accumulates near local cycle peaks.
“A higher cash reserve is the most direct signal the market needs to regain confidence in STRC,” Moreno said.
Not everyone reading the STRC decline sees a broken funding model. Benchmark analyst Mark Palmer published a note Tuesday rejecting comparisons between STRC and Terra’s collapsed stablecoin, arguing the company’s funding engine had become less efficient rather than broken.
Strategy has not indicated any plans to halt bitcoin purchases, and acquired 520 BTC for about $35 million in the week of June 22 while routing $300 million of new proceeds into its cash reserve.
