CryptoQuant issued a stark warning to Strategy (formerly MicroStrategy) on Wednesday, flagging growing fragility in the company's method of financing its Bitcoin holdings. The firm's STRC preferred shares slid to around $82.50 last week, roughly 17.5% below their $100 par value. STRC pays a fixed dividend yielding about 11.5%, and the recent Bitcoin price drop coincided with a shrinking cash buffer, amplifying financial strains.
STRC Shares Dive Below Par, Cash Reserves Plummet
According to CryptoQuant, Strategy's U.S. dollar reserves have fallen 38% since early 2026, while annual dividend obligations surged nearly fourfold to $1.2 billion. That slashed the coverage period — how long reserves can sustain dividend payouts — from over seven years to just 14 months. A key factor: the company's $1.5 billion convertible bond buyback in May, which severely depleted the cash backing STRC. Additionally, financing new Bitcoin purchases by issuing more STRC shares has sharply lifted the annual dividend burden.
CryptoQuant Urges Pause on Bitcoin Purchases
CryptoQuant advised Strategy to halt further Bitcoin buys and focus on rebuilding cash reserves first, then adopt a more disciplined timing approach for future acquisitions rather than buying every time new capital is raised. The report estimates that for STRC to appear financially stable, reserves should reach about $2.8 billion, equivalent to 24 months of dividend coverage. Yet as of mid-June, Strategy's reserves stood at merely $1.1 billion. This suggests that despite holding roughly 847,000 Bitcoin, the firm may not be as resilient in backing its obligations as previously assumed.
Forced Asset Sales Unlikely Near Term
Despite the pressures, CryptoQuant sees a forced Bitcoin sale as unlikely in the short run. There is no direct requirement to sell Bitcoin to support STRC shares; the company could instead raise its dividend rate or issue new shares. Suspending dividends is not a simple option, as STRC dividends are cumulative — skipped payouts must be made up later. Such a move could also undermine investor confidence, which is vital for the company.
CryptoQuant's much starker assessment contrasts with Benchmark analyst Mark Palmer's Tuesday comment, who dismissed direct comparisons between STRC and Terra's collapsed stablecoin structure, noting that while Strategy's financing mechanism has weakened, it has not broken down.