Strategy, the Bitcoin treasury company formerly known as MicroStrategy, is facing a sharp decline in its ability to cover dividend payments. CryptoQuant reports the company’s cash reserves now cover just 14 months of dividends — down from a seven-year coverage level previously.
The company’s dividend obligations have nearly quadrupled to $1.2 billion after issuing substantial new STRC preferred stock with an 11.5% yield. Meanwhile, its cash reserve has fallen 38% year-to-date to about $1.4 billion, largely due to a $1.5 billion debt repurchase at a discount in May.
CryptoQuant CEO Ki Young Ju didn’t mince words: “They should pause Bitcoin purchases, rebuild cash reserves, and adopt a systematic framework for purchase timing.” He also recommended creating a “disciplined selling framework” for the next bull market.
Things aren’t looking great for Strategy’s preferred shares either. STRC fell to $82.50 — a record 17.5% below its $100 par value — and the company’s common stock MSTR traded below $100 for the first time since March 2024.
CryptoQuant estimates Strategy needs to rebuild its cash reserve to roughly $2.8 billion (24 months of coverage) for STRC to recover. Selling Bitcoin isn’t a great option either — the company sits on about $10.6 billion in unrealized losses, and forced sales would “crystallize large losses and destroy shareholder value.”
