Strategy Inc. (Nasdaq: MSTR) should pause its bitcoin accumulation and prioritize rebuilding cash reserves, according to Cryptoquant, the onchain data firm whose research has tracked the company's balance sheet. The warning followed a sharp deterioration in the metrics that support the firm's preferred-stock dividends, with dividend coverage falling from more than seven years at the start of 2026 to just 14 months. The firm's cash reserves dropped 38% in 2026 as annual dividend obligations climbed to about $1.2 billion, driven by the issuance of more STRC preferred stock to fund bitcoin purchases. Strategy's recent repurchase of $1.5 billion of its convertible senior notes due in 2029 further reduced the cash available to support growing dividend payments. The company has built its identity on relentless bitcoin accumulation, making the recommendation to pause buying a notable shift from its core strategy.
Dividend Coverage Falls from Seven Years to 14 Months
Cryptoquant Head of Research Julio Moreno said the company's dividend coverage has fallen from more than seven years at the start of 2026 to just 14 months. Over the same stretch, annual dividend obligations have climbed from about $300 million to roughly $1.2 billion as the firm issued more STRC preferred stock to fund bitcoin purchases. Moreno stated: "As Strategy continues issuing STRC preferred stock to fund bitcoin purchases, its annualized dividend obligations have risen sharply while its cash buffer has thinned."
The deterioration was compounded by Strategy's repurchase of $1.5 billion of its 0% convertible senior notes due in 2029, a move that reduced the cash available to support those growing dividend payments.
STRC Preferred Shares Trade Below $100 Par Value
Strategy's STRC, a bitcoin-backed preferred stock, has struggled to return to its $100 par value, even slipping below $90 at points, as investors reassessed the instrument's risk. Journalist Laura Shin reported that STRC could not find its way back to par even as the company moved to a bi-monthly dividend cycle and added $300 million to bolster the structure.
Bitcoin.com News had reported last week that Cryptoquant flagged the risk that prolonged calm in bitcoin's price could itself sink STRC, a scenario in which the preferred stock weakens not on a crash but on a lack of upside momentum.
Cryptoquant Estimates $2.8 Billion Cash Requirement for Coverage Restoration
At the current annual dividend burden of about $1.2 billion, Moreno estimated Strategy would need roughly $2.8 billion in cash reserves to restore 24 months of dividend coverage, close to double its present level. The firm's cash position has been moving in the wrong direction as reserves have fallen by 38% since the start of 2026, even as dividend obligations have multiplied.
Michael Saylor has pushed back on bearish narratives, arguing the firm may sell bitcoin if needed while insisting its strategy keeps working. The immediate question is whether Strategy adjusts course, as a pause in purchases and a rebuild toward the roughly $2.8 billion Cryptoquant cites would ease dividend-coverage concerns.
FAQ
What did Cryptoquant recommend Strategy Inc. do about its bitcoin purchases?
Cryptoquant recommended that Strategy Inc. should pause its bitcoin accumulation and prioritize rebuilding cash reserves. Cryptoquant Head of Research Julio Moreno noted that the company's dividend coverage has fallen from more than seven years at the start of 2026 to just 14 months, while annual dividend obligations climbed to about $1.2 billion.
Why has Strategy's dividend coverage deteriorated?
Strategy's dividend coverage deteriorated because the firm issued more STRC preferred stock to fund bitcoin purchases, which increased annual dividend obligations from about $300 million to roughly $1.2 billion. Additionally, the company repurchased $1.5 billion of its convertible senior notes due in 2029, reducing the cash available to support dividend payments. The firm's cash reserves dropped 38% in 2026.
How much cash does Strategy need to restore adequate dividend coverage?
Cryptoquant Head of Research Julio Moreno estimated Strategy would need roughly $2.8 billion in cash reserves to restore 24 months of dividend coverage at the current annual dividend burden of about $1.2 billion. This amount is close to double the company's present cash level.
