CryptoQuant released a report Thursday advising Michael Saylor's Strategy to suspend further bitcoin purchases, replenish its U.S. dollar cash reserve and put in place a disciplined, systematic method for timing future cryptocurrency acquisitions.
Julio Moreno, head of research at the analytics firm, said the firm should move away from ad hoc buying and toward a "systematic, fundamental-driven approach to bitcoin purchase timing rather than buying whenever capital is available."
"Buying at cycle tops and accumulating during bear markets has resulted in rapid unrealized loss growth and deteriorating STRC fundamentals," Moreno added, referring to the company's flagship preferred stock.
CryptoQuant highlights a steep decline in Strategy's cash buffer this year and a simultaneous increase in recurring payout obligations. The firm's analysis shows Strategy's USD cash reserve has fallen 38% since the start of the year, while annualized dividend obligations have roughly quadrupled over the same period. In a Monday filing cited in the report, Strategy reported its USD reserve stood at $1.4 billion as of Sunday.
That mix of a shrinking reserve and rising dividends has materially reduced dividend coverage. Moreno noted dividend coverage has dropped to roughly 14 months from more than seven years earlier. CryptoQuant estimates Strategy would need about $2.8 billion in its cash reserve for STRC to recover to a more stable footing.
On the balance sheet front, Strategy still holds around $50 billion in bitcoin at current prices. The company has publicly maintained that its capital structure is manageable even under adverse crypto market conditions. CryptoQuant, however, cautions that those holdings offer limited immediate relief.
"Strategy's bitcoin holdings provide limited emergency relief, as the company currently holds an aggregate unrealized loss of $10.6 billion," Moreno said.
Moreno pointed to purchasing activity over recent years as a cause of the elevated unrealized losses. "All bitcoin purchased in 2024, 2025, and 2026 is underwater, with 2026 losses accelerating sharply as Strategy continued buying in the early stages of the bear market rather than preserving cash," he said. He warned that any forced sales of bitcoin at current prices would crystallize those losses at scale and could destroy shareholder value.
Market reaction has reflected those balance-sheet and operational worries. Strategy's common stock plunged more than 43% in June. On Wednesday, shares fell over 9% and hit an intraday low of $92.28 - the first time the stock traded below $100 since 2024. Strategy's preferred stock, STRC, declined to $79.85, a level about 20% below its $100 par value, marking a record low for the preferred issue.
Both issues continued to trade lower on Thursday. Strategy recently traded down more than 5% after touching a fresh 52-week low of $86.62, while STRC was nearly 2.5% lower.
The CryptoQuant report frames the company's recent accumulation strategy and the accompanying drawdown in its cash reserves as a risk to both equity and preferred holders, recommending an immediate reassessment of purchase cadence and liquidity management.