As part of a detailed analysis released recently, on-chain analytics platform CryptoQuant (NASDAQ:MSTR) highlighted growing financial strains at Strategy, the prominent Bitcoin-focused firm led by Michael Saylor. Researchers pointed to a significant deterioration in the company’s liquidity position, driven by surging dividend obligations on its preferred stock (STRC) and a notable decline in cash holdings.
According to the report, these pressures have reduced dividend coverage from over seven years earlier in the year to approximately 14 months, raising questions about the sustainability of the firm’s aggressive Bitcoin-buying strategy.
Strategy’s cash reserves have dropped by about 38% since the beginning of 2026, partly due to actions such as the early repurchase of $1.5 billion in convertible senior notes.
At the same time, annualized dividend commitments have nearly quadrupled to roughly $1.2 billion, largely from expanded issuance of preferred shares used to fund Bitcoin acquisitions.
Analysts estimate that restoring a more comfortable 24-month dividend coverage would require building cash reserves to around $2.8 billion—nearly double current levels.
This buffer is viewed as essential for restoring market confidence in the company’s capital structure.
CryptoQuant emphasized that forced sales of Bitcoin holdings to address liquidity shortfalls would be highly undesirable.
The firm currently carries substantial unrealized losses—estimated at $10.6 billion—on Bitcoin acquired between 2024 and 2026, as many positions were entered at higher price levels.
Realizing those losses at prevailing market rates could erode shareholder value and undermine the long-term Bitcoin treasury thesis.
Beyond immediate liquidity recommendations, the analysis offered broader strategic guidance.
CryptoQuant suggested pausing large-scale Bitcoin purchases until reserves and coverage metrics improve.
It also advocated shifting from opportunistic buying—often criticized in market commentary as occurring near local highs—to a more disciplined, model-driven framework for timing acquisitions.
This systematic method could better align purchases with favorable market conditions and reduce perceptions of inefficiency.
Additionally, experts proposed establishing a clear profit-taking protocol for future bull markets.
Selectively selling portions of Bitcoin holdings during rallies could help deleverage the balance sheet, generate cash reserves (“dry powder”) for opportunistic buying during downturns, and realize gains without abandoning the core Bitcoin strategy.
CryptoQuant CEO Ki Young Ju reinforced these points on social media, noting that continuous buying under current high selling-pressure conditions functions more as a liquidity absorber than a catalyst for price appreciation.
He observed that despite hundreds of billions in capital inflows and growth in Bitcoin‘s realized capitalization, prices have largely remained range-bound.
This perspective underscores a tension in Strategy‘s model: while its conviction-driven accumulation has removed substantial Bitcoin supply from circulation, sustained buying amid elevated seller activity may be delaying a healthier market reset involving capitulation and re-accumulation phases typical of past cycles.
A more balanced framework could enhance resilience without compromising the firm’s Bitcoin-centric vision.
As Bitcoin markets navigate extended sideways action, CryptoQuant‘s insights highlight the importance of prudent treasury management for institutional players. Strategy’s response to these suggestions could influence both its stock performance and broader market dynamics.
