Saylor’s Strategy should pause bitcoin buys, says CryptoQuant

Investing.com -- Michael Saylor's Strategy should pause its bitcoin purchases, rebuild its cash reserves and develop a disciplined strategy for buying the flagship cryptocurrency, according to a CryptoQuant report released Thursday.

"Strategy should develop a systematic, fundamental-driven approach to bitcoin purchase timing rather than buying whenever capital is available," Julio Moreno, head of research at the analytics firm, said in the report.

"Buying at cycle tops and accumulating during bear markets has resulted in rapid unrealized loss growth and deteriorating STRC fundamentals," he said, referring to the company's flagship preferred stock.

Moreno noted that Strategy's USD cash reserve has fallen 38% since the start of the year, while annualized dividend obligations have roughly quadrupled in the same period. As of Sunday, Strategy's USD Reserve held $1.4 billion, according to a Monday filing.

Dividend coverage, which refers to how long the reserve can continue to fund dividend payments, has been reduced to just 14 months from more than seven years, Moreno added. The company needs about $2.8 billion in the cash reserve for STRC to recover.

Strategy still holds about $50 billion in bitcoin at current prices. The company has said its capital structure is manageable even under adverse crypto conditions.

"Strategy's bitcoin holdings provide limited emergency relief, as the company currently holds an aggregate unrealized loss of $10.6 billion," Moreno said. "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. Any forced bitcoin sale at current prices would crystallize these losses at scale and destroy shareholder value."

Strategy shares dropped more than 43% in June. On Wednesday, shares fell more than 9% to hit an intraday low of $92.28, the first time shares fell beneath $100 since 2024. The preferred stock STRC dropped to $79.85, a record 20% below its $100 par level.

Both continued to decline on Thursday. Strategy was recently down more than 5% after hitting a fresh 52-week low of $86.62, while STRC was nearly 2.5% lower.

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