CryptoQuant is urging Michael Saylor's Strategy to pause bitcoin purchases and rebuild its USD cash reserve, warning that dividend coverage has fallen to just 14 months as the company's shares hit a fresh 52-week low.
Michael Saylor's Strategy should pause its bitcoin buying program, shore up its cash reserves, and adopt a more disciplined acquisition approach, according to a report published Thursday by crypto analytics firm CryptoQuant.
The warning comes as Strategy shares have fallen more than 43% in June alone, with the stock hitting a fresh 52-week intraday low of $86.62 on Thursday after tumbling more than 9% the prior session to an intraday low of $92.28 — the first time shares had dropped below $100 since 2024.
"Strategy should develop a systematic, fundamental-driven approach to bitcoin purchase timing rather than buying whenever capital is available," Julio Moreno, head of research at CryptoQuant, said in the report.
Moreno also flagged deterioration in Strategy's flagship preferred stock, STRC, which dropped to $79.85 on Wednesday — a record 20% below its $100 par level — before sliding to a new low of $73.62 on Thursday.
"Buying at cycle tops and accumulating during bear markets has resulted in rapid unrealized loss growth and deteriorating STRC fundamentals," Moreno said, referring to the preferred shares.
The company's USD cash reserve has fallen 38% since the start of the year, while annualized dividend obligations have roughly quadrupled over the same period, according to Moreno. As of Sunday, Strategy's USD Reserve stood at $1.4 billion, per a Monday filing. The company said in that filing it "plans to continue replenishing the USD Reserve over time based on market conditions."
Dividend coverage — the length of time the reserve can fund dividend payments — has contracted to just 14 months from more than seven years, Moreno noted. He estimated Strategy needs approximately $2.8 billion in cash reserves, equivalent to 24 months of coverage, for STRC to recover to par.
Despite the drawdown, Strategy still holds roughly $50 billion in bitcoin at current prices, a figure bulls cite as a long-term buffer against liquidity pressure. The company has maintained that its capital structure remains manageable under adverse crypto conditions.
Not all analysts share the alarm. Mark Palmer, an analyst at Benchmark, drew a distinction between a less efficient preferred-stock funding mechanism and a structurally broken model. "When STRC is trading materially below par, then that mechanism slows, and the company's bitcoin acquisition activity slows with it," Palmer said in a note Monday. "However, there is a meaningful difference between stating that Strategy's preferred stock funding engine has become less efficient and asserting that the company's overall model is broken, as some of its detractors have suggested."
Sam Callahan, director of bitcoin strategy and research at bitcoin treasury firm OranjeBTC, pushed back on the idea of pausing purchases entirely. "The last transaction that Strategy did was increase the USD reserve … as well as acquire 520 BTC, and both of those parts of the transaction help improve the credit quality of STRC because it increases the asset base supporting it," Callahan said. He added that buying bitcoin during a market downturn could prove attractive for a firm with a five-to-ten-year forward view on the asset.
Callahan also noted that STRC is a relatively new instrument — less than a year old — and that volatility "for a novel instrument like this, which is supported by an asset that is inherently volatile itself, is to be expected."
The CryptoQuant report stops short of predicting an imminent bitcoin liquidation, but Moreno warned that Strategy's options for responding to further stress are constrained. He estimated the company currently carries an aggregate unrealized bitcoin loss of $10.6 billion, with all purchases made in 2024, 2025, and 2026 underwater. "Any forced bitcoin sale at current prices would crystallize these losses at scale and destroy shareholder value," he said.
How Strategy navigates the twin pressures of a depleted cash reserve and rising preferred dividend obligations will be closely watched by markets in the weeks ahead, particularly as upcoming debt repayment deadlines approach.
Marc Sabatini is a staff writer at TechEchelon covering enterprise software, cybersecurity, and the regulatory beats that shape both. He focuses on the deal flow and policy decisions that move markets.
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