CryptoQuant warns on Strategy's dividend coverage as cash reserve falls 38%
CryptoQuant says Strategy should pause Bitcoin purchases and rebuild its cash reserve after dividend coverage dropped to 14 months from seven years. Dividend obligations have nearly quadrupled to $1.2 billion, driven by new STRC preferred shares yielding 11.5%. The firm’s cash reserve fell sharply after debt repurchases, though it later recovered to about $1.4 billion after selling MSTR shares. STRC also dropped below its $100 par value, which weakens Strategy’s ability to raise more funds through preferred share sales. CryptoQuant argues Strategy can defend STRC with tools like higher yields or MSTR issuance, but recovering the reserve to about $2.8 billion would be needed for STRC to regain stability. It also says forced Bitcoin sales would lock in large unrealized losses and hurt shareholder value.
