CryptoQuant warns on Strategy's dividend coverage as cash reserve falls 38%

Cash Reserves Drop to 14 Months of Dividend Coverage

Strategy's cash reserves are now enough to pay only 14 months of dividends, down from the previous seven-year level. CryptoQuant said the company should pause Bitcoin purchases and rebuild its reserves.

Strategy cash reserve and dividend coverage in months. Source: CryptoQuant

CryptoQuant said Strategy is not "obligated" to sell Bitcoin to maintain STRC's price, as the company can also deploy other tools to defend the stock, such as raising the current 11.5% dividend yield or issuing MSTR stock to "signal its ability to continue paying dividends," adding:

"However, the path back to $100 is not straightforward. [...] Rebuilding the cash reserve to ~$2.8 billion (24 months of coverage) is a necessary condition for STRC to recover."

Bitcoin Holdings Offer Limited Emergency Cushion

Strategy's Bitcoin holdings only provide a "limited emergency cushion," as the company is sitting on about $10.6 billion in unrealized losses, meaning that a forced BTC sale at current rates would "crystallize large losses and destroy shareholder value," CryptoQuant said.

Related: Capital B shareholders approve up to $120B in financing capacity for Bitcoin strategy

STRC and MSTR Trading Activity

Ahead of Wednesday's Nasdaq market open, STRC shares were little changed after closing at $87.31 on Tuesday. That extended the preferred stock's 12% decline in the past month, according to Yahoo Finance data.

STRC/USD, 1-month chart. Source: Yahoo Finance

Strategy's common stock, MSTR, also traded below $100 in the pre-market on Wednesday for the first time since March 1, 2024, when it fell as low as $99.20, according to Yahoo Finance data.

Analyst Attributes Decline to Deteriorating Fundamentals

CryptoQuant's head of research, Julio Moreno, attributed STRC's decline to a "deterioration in Strategy's fundamentals," including its falling dividend cash coverage caused by the depletion of its cash reserve and a fourfold increase in STRC's annualized dividend obligations so far in 2026.

Magazine: Bitcoin, the 'canary in the coal mine,' XRP transaction demand falls 91.5%: Market Moves