CryptoQuant Flags Strategy’s Dividend Coverage as Cash Reserves Drop 38%

Strategy’s preferred shares have slipped further below par as the company’s cash buffers shrink and its dividend obligations rise, adding pressure to the mechanisms investors watch most closely in the publicly listed Bitcoin treasury model.

According to CryptoQuant, Strategy led by Michael Saylor should pause new Bitcoin purchases and rebuild cash reserves after dividend coverage fell to roughly 14 months from seven years. In parallel, Strategy’s STRC preferred stock traded around $82.50—about 17.5% under its $100 par value—reflecting how quickly funding headroom can deteriorate when Bitcoin and cash availability move against the same cycle.

Key takeaways

• CryptoQuant links STRC’s move below par to a Bitcoin-led correction alongside the “simultaneous depletion” of Strategy’s USD cash reserve.
• Dividend coverage is the central stress indicator: CryptoQuant says it has fallen to about 14 months from seven years as cash reserves decline.
• STRC trading below par constrains fundraising: CryptoQuant notes that sub-$100 pricing can limit Strategy’s ability to raise capital through STRC sales.
• Reaching $100 appears conditional on cash rebuilds: CryptoQuant says returning to full value is not straightforward and requires rebuilding reserves toward roughly $2.8 billion (about 24 months of coverage).
• Strategy has signaled it intends to “continue replenishing” reserves to support the credit quality of its Digital Credit securities, according to a company post on X.

Cash coverage and dividend pressure take center stage

CryptoQuant’s report argues that Strategy’s dividend coverage deterioration is not merely a market volatility issue—it’s a funding-structure problem that affects how the firm can sustain its preferred-share financing engine.

CryptoQuant CEO Ki Young Ju said in an X post on Wednesday that Strategy should “pause Bitcoin purchases, rebuild cash reserves, and adopt a systematic framework for purchase timing.” He also urged the largest public Bitcoin treasury holder to implement a “disciplined selling framework” for the next bull market.

The investment thesis risk, from CryptoQuant’s perspective, is that Strategy’s cash reserve has been drawn down while dividend requirements have risen. The report points to a near quadrupling of dividend obligations to about $1.2 billion, tied to the issuance of additional STRC preferred stock with an 11.5% yield.

How reserve depletion connects to STRC pricing

STRC is one of Strategy’s main mechanisms for generating funding to support Bitcoin accumulation. When STRC trades below its $100 par value, it can limit Strategy’s ability to raise funds efficiently through additional sales, while also potentially encouraging investors to demand higher compensation to offset expected cash-flow risk.

CryptoQuant attributed STRC’s last-week move to approximately $82.50 to two overlapping factors: a broader Bitcoin bear-market correction and the depletion of Strategy’s cash reserve. CryptoQuant also suggested that the combination could force Strategy to adjust its approach—potentially including increasing the nominal dividend rate—to attract buyers and protect STRC’s market price.

Strategy’s own messaging indicates it is focused on replenishing the USD reserve. In a Monday X post, the company said it plans to “continue replenishing” its USD reserve to support the credit quality of its Digital Credit securities.

Cointelegraph reported on May 26 that Strategy repurchased $1.5 billion of its 2029 senior notes at a discount. Since then, the company’s cash position has reportedly improved after it sold $335.5 million in MSTR shares, adding $300 million to its US dollar reserve. Even with that recovery, the reserve remains near a record-low level of about 14 months of funds available to pay dividends, leaving less margin for error if market conditions remain unfavorable.

CryptoQuant says Strategy isn’t forced to sell Bitcoin—yet the pathway back is harder

CryptoQuant argues that Strategy is not “obligated” to sell Bitcoin to defend STRC’s price. Instead, it highlights that the firm can use other tools, including raising the current 11.5% dividend yield or issuing MSTR shares as a signal that it can continue paying dividends.

Still, CryptoQuant cautioned that “the path back to $100 is not straightforward.” In its assessment, rebuilding Strategy’s cash reserve to roughly $2.8 billion—equivalent to about 24 months of coverage—appears to be a necessary condition for STRC to recover.

CryptoQuant also framed Strategy’s Bitcoin holdings as only a “limited emergency cushion” for this purpose. It noted that Strategy is carrying about $10.6 billion in unrealized losses, meaning any forced Bitcoin sale at current levels would crystallize those losses and, in CryptoQuant’s view, potentially damage shareholder value.

“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.”

What traders are watching: STRC and MSTR moving together

In the market, STRC’s slide has continued into the most recent sessions. Ahead of Wednesday’s Nasdaq open, STRC shares were little changed after closing at $87.31 on Tuesday, extending the preferred stock’s decline of about 12% over the past month, based on Yahoo Finance data.

Strategy’s common stock, MSTR, has also shown signs of increased caution. Yahoo Finance data indicates that MSTR traded below $100 in pre-market trading on Wednesday for the first time since March 1, 2024, when it fell as low as $99.20.

CryptoQuant head of research Julio Moreno linked the preferred-stock weakness to a “deterioration in Strategy’s fundamentals,” citing the decline in dividend cash coverage driven by cash depletion and the fourfold increase in STRC’s annualized dividend obligations so far in 2026.

While Strategy’s preferred and common stocks respond to broader sentiment about Bitcoin, CryptoQuant’s emphasis on cash coverage and dividend obligations highlights a more specific risk channel: how capital structure and liquidity timing interact with market drawdowns.

For investors, the next signal to watch is whether Strategy can execute its stated plan to “continue replenishing” USD reserves enough to restore dividend coverage toward the levels CryptoQuant considers necessary—while also seeing whether STRC’s discount to par narrows as cash availability stabilizes.