CryptoQuant Says Michael Saylor Should Pause Strategy’s Bitcoin Accumulation

CryptoQuant has warned that the financial buffer supporting Strategy’s STRC preferred stock has deteriorated sharply, shrinking from roughly seven years of dividend coverage to just about 14 months, while aggressive Bitcoin accumulation at market peaks has left the company with an estimated $10.6 billion in unrealized losses.

The on-chain analytics firm said Strategy (MSTR) should pause its Bitcoin purchases, rebuild cash reserves, and adopt a more disciplined, cycle-aware approach to accumulation, according to a Wednesday report shared with CoinDesk.

The strain is most visible in STRC, Strategy’s flagship preferred equity. The instrument recently fell to around $82.50—about 17.5% below its intended $100 par value—highlighting pressure in a structure designed to trade near face value.

Preferred stock represents a class of equity that pays fixed dividends, and STRC currently carries an annual yield of about 11.5%. Its decline has come amid both Bitcoin’s price pullback and weakening internal liquidity.

CryptoQuant pointed to a shrinking dollar reserve as a key concern, noting that Strategy’s cash buffer has dropped 38% since early 2026, while annual dividend obligations have surged nearly fourfold to approximately $1.2 billion.

As a result, dividend coverage—measured by how long reserves can sustain payouts—has collapsed from over seven years to roughly 14 months. A major contributor was Strategy’s $1.5 billion expenditure in May to repurchase convertible debt, significantly reducing liquidity available to support STRC.

At the same time, expanded issuance of STRC to fund additional Bitcoin purchases has driven liabilities sharply higher, with annual dividend obligations rising from about $300 million at the start of 2026 to $1.2 billion today.

CryptoQuant estimates that Strategy would need to rebuild reserves to around $2.8 billion—equivalent to roughly 24 months of coverage—for STRC stability to improve. The company currently holds about $1.1 billion in reserves as of mid-June.

Despite its massive Bitcoin position, CryptoQuant argues the treasury is offering less downside protection than its size implies.

The firm estimates Strategy is sitting on about $10.6 billion in unrealized losses, with Bitcoin purchased across 2024, 2025, and 2026 now underwater. It warned that any forced liquidation at current levels would lock in significant losses and erode shareholder value.

However, it added that an immediate forced sale is unlikely. Strategy is not obligated to sell Bitcoin to support STRC and instead retains the ability to raise dividends or issue additional shares to maintain payments—mechanisms it has already used.

CryptoQuant’s recommendation is for Strategy to temporarily halt Bitcoin accumulation, restore cash buffers, and only resume purchases under a more systematic, cycle-aware framework rather than continuous buying during capital inflows.

The firm also noted that STRC dividends are cumulative, meaning missed payments must eventually be repaid, making suspension unlikely due to the potential reputational damage among preferred shareholders.

The report presents a more critical stance than a recent note from Benchmark-StoneX, which dismissed comparisons between STRC and Terra’s failed stablecoin and instead described Strategy’s funding model as less efficient rather than structurally broken.

Ultimately, CryptoQuant’s suggestion would represent a major shift from Strategy’s long-standing approach. The company has consistently accumulated Bitcoin, building a position of roughly 847,000 BTC, with Michael Saylor’s strategy centered on continuous buying as a core identity. Pausing accumulation to repair the balance sheet would stabilize STRC but fundamentally alter that strategy.

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