CryptoQuant Urges Strategy To Pause bitcoin Purchases

The institutional bitcoin accumulation strategy, long presented as the engine of the crypto market, today faces its first structural limits against the reality of current financial obligations. In an increasingly demanding market, the cash management of large listed companies becomes an indicator just as important as the amount of crypto held. It is in this particularly tense atmosphere that CryptoQuant, an on-chain analysis company, has publicly advised Strategy to stop buying bitcoin. This alert reveals a critical imbalance between the collapse of the company’s dollar cash reserves and the explosion of its dividend payment obligations.

Cash under pressure amid exploding financial obligations

The report published by Julio Moreno, CryptoQuant’s research director, highlights a rapid deterioration in Strategy’s liquidity indicators, while the STRC attracts bearish bets. The company presents an accounting situation marked by several essential data points :

• A cash reserve drop : the company’s dollar cash reserves have decreased by 38% since the beginning of the year ;
• Bond buyback : this decrease is explained by the repurchase of $1.5 billion of its 0% senior convertible bonds maturing in 2029 ;
• An explosion of dividends : to finance its bitcoin acquisitions, the massive issuance of STRC preferred shares has raised the annual dividend obligations from $300 million to nearly $1.2 billion ;
• Coverage collapse : the coverage of STRC preferred share dividends by available cash has collapsed, dropping from over seven years to only 14 months.

Julio Moreno estimates that to restore coverage to 24 months at the current commitment rate, the company would need about $2.8 billion in cash reserves, nearly double its current level. The expert emphasizes that it is extremely unlikely that such a suspension of accumulated dividends would occur, as it would destroy the company’s credibility, and assures “that a higher cash reserve is the most direct signal the market needs to regain confidence in STRC”. This imbalance generates an effect that now alarms traditional financial markets.

The trap of unrealized losses and the market confidence crisis

Beyond cash flows, Strategy’s asset valuation is heavily impacted by the market correction, causing an investor confidence crisis. The STRC preferred share has lost up to $82.50, a historic discount of 17.5% on its $100 face value.

Its recent purchases weigh even more on the company’s finances as it records an overall unrealized loss of about $10.6 billion on its bitcoins. All the tokens bought during 2024, 2025, and 2026 are now below their purchase price. Julio Moreno warns against the option of asset sales to restore cash. “Any forced Bitcoin sale at current prices would crystallize these losses on a large scale and destroy shareholder value,” he explains.

This situation shakes the company’s image on Wall Street, where Strategy’s business model is increasingly seen as risky by traditional investors. The absolute dependency on the leading crypto generates volatility poorly tolerated by the bond market, especially when liquidity becomes scarce. The discount on STRC shares reflects growing skepticism about the company’s ability to continue its aggressive acquisition pace. Without rapid price stabilization or new liquidity inflows, the company’s financial structure could be severely tested, forcing management to readjust operational priorities to reassure creditors.

CryptoQuant’s strategic recommendations for the future

To turn things around, CryptoQuant’s research director gave several direct pieces of advice to the company’s leaders. The firm first advises temporarily suspending bitcoin purchases until dollar reserves and dividend coverage are restored.

Next, CryptoQuant encourages moving from opportunistic purchases driven only by capital availability to a systematic approach guided by mathematical models, even humorously noting that “Strategy always buying the local top has become a real meme in the market”. He says on this topic that “buying whenever capital is available is not a strategy, it’s a recipe to accumulate at cycle tops”. Finally, the report recommends establishing a strict framework to sell portions of bitcoin during upcoming bull markets to realize gains, reduce leverage, and rebuild liquid reserves for correction periods.

Analyzing this situation requires a nuanced approach to the prospects of Michael Saylor’s firm, which still has financial levers without having to liquidate its cryptos. Indeed, the company already has two levers to reassure markets about its solvency: increase the current dividend yield (11.5%) or issue new ordinary MSTR shares.

However, “returning to $100 is not simple”, Moreno recalls. This observation echoes JPMorgan analysts’ warnings who, after a symbolic sale of 32 bitcoins by the company intended to reassure preferred shareholders, had already stressed that Strategy must imperatively rebuild its dollar reserves to restore confidence. The company’s future will depend on its ability to reconcile its ideological commitment to bitcoin with rigorous management of its traditional accounting obligations.