CryptoQuant Flags Mounting Pressure on Strategy's Balance Sheet CryptoQuant's head of research, Julio Moreno, has called on Strategy, the Bitcoin treasury company formerly known as MicroStrat
CryptoQuant's head of research, Julio Moreno, has called on Strategy, the Bitcoin treasury company formerly known as MicroStrategy, to immediately pause its $BTC purchases and focus on rebuilding its cash reserves. The warning, published in a Tuesday report, comes as several financial pressure points converge on the company at once.
Strategy's preferred stock STRC fell to $82.50 last week, a record 17.5% below its $100 par value, after Bitcoin bear market pressure coincided with a sharp decline in the company's cash reserves.Moreno noted that Strategy recently repurchased $1.5 billion of its 0% convertible senior notes due in 2029, reducing the cash buffer available to support STRC dividends, while cash reserves have fallen 38% since the start of 2026.
Strategy's dividend obligations have also increased sharply because the company issued more STRC to fund Bitcoin purchases. Those obligations have risen from roughly $300 million annualized at the start of the year to approximately $1.2 billion today, a nearly fourfold increase in under six months. As a result, the dividend coverage capacity for STRC preferred stock dropped from more than seven years to just 14 months.
Moreno said that selling Bitcoin to rebuild cash reserves would not be a good option for Strategy, as the company currently sits on an aggregate unrealized Bitcoin loss of about $10.6 billion, with all Bitcoin purchased during 2024, 2025, and 2026 currently underwater. "Any forced Bitcoin sale at current prices would crystallize these losses at scale and destroy shareholder value," Moreno wrote.
Moreno says that Strategy would need about $2.8 billion in cash to bring its two-year dividend coverage back up to normal. "A higher cash reserve is the most direct signal the market needs to regain confidence in STRC," he said.CryptoQuant says the reserve must reach about $2.8 billion, or 24 months of coverage, before STRC can recover. At $1.4 billion, Strategy is only halfway there.
Although Strategy can suspend STRC dividend payments, these dividends are cumulative and have to be paid at some point. Moreno added that Strategy is unlikely to suspend the dividends as it would hurt credibility.Moreno also said Strategy is not obligated to sell Bitcoin to support STRC and can instead raise the current 11.5% dividend yield or issue MSTR stock to signal its ability to continue paying dividends, noting that both tools are already being used.
The report adds to a broader chorus of concern. JPMorgan has also flagged that Strategy may need to continue building dollar reserves to manage dividend obligations tied to its preferred stock, with the concern that those dividend needs could force future Bitcoin sales.
Sources:The Block: CryptoQuant says Strategy should pause Bitcoin purchases and rebuild cash reservesCoinDesk: How STRC Lost Its Par
