CryptoQuant, an onchain analytics firm, has warned that Michael Saylor's Strategy should stop buying bitcoin and instead focus on rebuilding its depleted cash reserves. The firm’s STRC preferred stock has dropped 17.5% below its $100 par value as dividend obligations nearly quadrupled to $1.2 billion while cash reserves fell 38% this year. CryptoQuant notes that dividend coverage has collapsed from over seven years to about 14 months due to aggressive bitcoin purchases and a $1.5 billion buyback of convertible notes in May. The company sits on a $10.6 billion unrealized loss, with all bitcoin bought since 2024 underwater. CryptoQuant recommends pausing accumulation until reserves reach $2.8 billion to restore 24 months of dividend coverage. While a forced sale is unlikely, the report highlights the need for a more disciplined, systematic approach to bitcoin purchases.

Key facts

• STRC preferred stock dropped 17.5% below $100 par due to cash reserve depletion.
• Dividend coverage collapsed from 7 years to 14 months; obligations hit $1.2 billion.
• Strategy has $10.6 billion unrealized loss on bitcoin bought since 2024.
• CryptoQuant recommends pausing bitcoin buys until reserves reach $2.8 billion.
• Forced sale unlikely; Strategy can raise dividends or issue shares instead.

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