CryptoQuant recommends that Strategy pause its Bitcoin purchases, reinforce its cash buffers, and adopt a disciplined approach to acquiring the flagship cryptocurrency, according to a recent report. Julio Moreno, head of research at the analytics firm, argues that the company should implement a systematic, fundamentals‑driven schedule for Bitcoin buying rather than acquiring whenever capital becomes available. He notes that purchasing at cycle peaks and accumulating during bear markets has accelerated unrealized losses and weakened STRC fundamentals, where STRC refers to the company’s flagship preferred stock. The analysis coincides with a multi‑week sell‑off that has driven Strategy’s share price down more than 43% in June. On Wednesday, shares fell over 9% to an intraday low of $92.28, marking the first time they have dropped below $100 since 2024. The preferred stock STRC slipped to $79.85, a record 20% below its $100 par value, and continued to decline on Thursday. Strategy’s shares have recently slipped over 4%, touching a fresh 52‑week low of $86.62, while STRC edged down nearly 3%, having previously hit a low of $73.62. Year‑to‑date figures show a 38% reduction in Strategy’s USD cash reserves since the beginning of the year, with annualized dividend obligations roughly quadrupling in the same period. As of Sunday, the company’s USD reserve stood at $1.4 billion, per a Monday filing that also indicated plans to “continue replenishing the USD Reserve over time based on market conditions” to support the credit quality of its Digital Credit securities such as STRC. Moreno added that dividend coverage has fallen to 14 months, down from more than seven years, and the firm would need approximately $2.8 billion in cash reserves — equivalent to 24 months of coverage — to restore STRC to a healthier level. Despite the downturn, Strategy still holds roughly $50 billion worth of Bitcoin at current market prices, a buffer that proponents say protects against liquidity stress. While the firm maintains that its capital structure can endure adverse crypto conditions, analysts warn that higher dividend payments on preferred shares and upcoming debt maturities could signal increasing pressure or refinancing risk. “When STRC trades near or above its $100 target, Strategy can efficiently issue new shares via its ATM program to fund additional Bitcoin acquisitions,” noted Benchmark analyst Mark Palmer. “When STRC falls well below par, that mechanism slows, curbing Bitcoin purchases. The distinction between a less efficient funding engine and a fundamentally broken model is significant, as some critics have suggested.” The CryptoQuant report does not anticipate an imminent Bitcoin liquidation, yet Moreno stresses that Strategy faces limited options in the face of further stress. Strategies such as raising dividend yields or issuing new equity might offer short‑term market confidence but do not resolve the underlying mismatch between cash outflows and reserve levels. “Strategy’s Bitcoin holdings provide limited emergency relief, given an aggregate unrealized loss of $10.6 billion,” he said. “All Bitcoin acquired between 2024 and 2026 operates at a loss, with 2026 losses accelerating as the company continued buying during the early stages of the bear market rather than preserving cash. Any forced sale at current prices would crystallize those losses on a large scale and erode shareholder value.” As STRC is a relatively new instrument — under a year old — and the market is still determining how to price such securities, volatility is expected, said Sam Callahan, director of Bitcoin strategy and research at OranjeBTC. Additionally, some investors are adding leverage, which can amplify price swings. While a rebuild of the USD reserve is advisable, Moreno’s call to pause Bitcoin purchases carries trade‑offs; Callahan pointed out that the recent transaction that increased the USD reserve and acquired 520 BTC enhanced STRC’s credit quality by expanding its asset base. “If the outlook for Bitcoin remains positive over the next five to ten years, buying now under these market conditions could be attractive,” he added.
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