In a significant advisory report, CryptoQuant has urged Michael Saylor’s Strategy to pause new Bitcoin purchases and focus on rebuilding its cash reserves in U.S. dollars. This recommendation follows a notable increase in the company’s annualized dividend obligations and a concerning decline in liquidity, particularly regarding the STRC preferred stock.
CryptoQuant’s analysis indicates that Strategy’s annualized dividend obligations have surged to approximately $1.2 billion in 2026, a steep increase from around $300 million at the beginning of the year. Simultaneously, the company’s cash reserves have plummeted by 38%, raising alarms about its ability to meet these obligations.
The warning comes on the heels of a sharp decline in the value of STRC, Strategy’s variable-rate preferred stock, which recently traded as low as $82.50 — about 17.5% below its par value of $100. This drop has led to renewed scrutiny regarding dividend coverage, liquidity, and the pace at which the company is accumulating Bitcoin.
CryptoQuant Highlights Cash Coverage Concerns
Julio Moreno, CryptoQuant’s head of research, noted that the decline in STRC’s value is partially attributed to leveraged positions being liquidated, but he also emphasized that the downturn reflects deteriorating fundamentals. He pointed out that cash coverage for dividends has reached an all-time low as annualized obligations have surged while cash reserves dwindle.
According to CryptoQuant, the dividend coverage for STRC has fallen dramatically from over seven years at the start of 2026 to just about 14 months. To restore a 24-month coverage at current annual obligations, Strategy would require roughly $2.8 billion in cash reserves.
Recently, Strategy repurchased about $1.5 billion worth of its 0% convertible senior notes due in 2029. This move has further strained the company’s cash reserves, compounding the challenges posed by increasing dividend obligations, particularly as more STRC was issued to fund Bitcoin purchases.
Moreno suggested that a stronger cash reserve would be essential to rebuild market confidence in STRC and recommended that Strategy adopt a more selective approach to Bitcoin purchases rather than acquiring Bitcoin whenever new capital becomes available.
Shifts in Capital Allocation
CryptoQuant’s recommendation follows recent actions taken by Strategy to slow down Bitcoin acquisitions and bolster its cash reserves. In the week ending June 22, the company purchased 520 BTC for approximately $35 million while also raising $335.5 million through common stock sales.
During this same timeframe, Strategy increased its cash reserves by about $300 million, bringing the total to $1.4 billion. This strategic shift contrasts with past practices where nearly all raised capital was directed solely towards Bitcoin accumulation.
At present, Bitcoin is trading around $62,500, which keeps Strategy’s Bitcoin holdings below the average purchase price of approximately $75,000. Currently, the company faces an unrealized Bitcoin loss nearing $10.6 billion, further complicating its financial landscape.
Debate Among Analysts and Bitcoin Advocates
The recommendation to pause Bitcoin purchases has sparked a debate among analysts and Bitcoin supporters. CryptoQuant cautioned against the notion of selling Bitcoin to rebuild cash reserves, as this could crystallize losses and negatively impact shareholder value. Alternative strategies such as issuing common stock or raising the STRC dividend rate have been proposed, though neither presents an easy solution for restoring par value.
Contrastingly, JAN3 CEO Samson Mow has expressed a more optimistic view, arguing that STRC possesses a self-repairing mechanism when trading below $100. He suggests that a lower market price increases effective yield for investors, as dividends are calculated against the par value rather than the discounted trading price.
In conclusion, while some advocate for a more aggressive approach to Bitcoin accumulation, CryptoQuant maintains that Strategy should prioritize improving cash reserves and dividend coverage before resuming Bitcoin purchases.
