CryptoQuant has warned that the cash buffer supporting Strategy’s STRC preferred stock has deteriorated significantly, shrinking from about seven years of dividend coverage to just around 14 months. At the same time, aggressive Bitcoin accumulation near cycle highs has left the company with an estimated $10.6 billion in unrealized losses.

The on-chain analytics firm says Strategy (MSTR) should pause Bitcoin purchases, rebuild its cash reserves, and adopt a more disciplined, cycle-aware approach to buying, according to a Wednesday report shared with CoinDesk.

The pressure is most visible in STRC, Strategy’s flagship preferred stock, which recently slipped to about $82.50—roughly 17.5% below its intended $100 par value—highlighting strain in an instrument designed to trade near face value.

STRC carries an 11.5% dividend yield, and its weakness has come alongside Bitcoin’s broader correction and tightening liquidity across Strategy’s balance sheet.

CryptoQuant highlighted a sharp deterioration in dollar reserves, noting that Strategy’s cash position has dropped 38% since early 2026, while annual dividend obligations have climbed to roughly $1.2 billion.

As a result, dividend coverage—how long reserves can fund payouts—has collapsed from more than seven years to about 14 months. A key factor was Strategy’s $1.5 billion spending in May to repurchase convertible debt, which drained liquidity that previously supported STRC.

Meanwhile, repeated issuance of STRC to finance further Bitcoin purchases has driven obligations higher, with annual dividend costs rising from roughly $300 million at the start of 2026 to $1.2 billion today.

CryptoQuant estimates Strategy would need to rebuild its reserves to around $2.8 billion, or about 24 months of coverage, to restore stability. The company currently holds roughly $1.1 billion in cash.

Despite its large Bitcoin position, CryptoQuant argues the balance sheet offers less protection than its headline size suggests.

It estimates Strategy is sitting on about $10.6 billion in unrealized losses, with Bitcoin bought between 2024 and 2026 now underwater. Any forced liquidation at current prices, it warns, would lock in losses and erode shareholder value.

However, an immediate forced sale is considered unlikely. Strategy is not required to sell Bitcoin to support STRC and can instead rely on dividend adjustments or equity issuance—tools it has already used.

CryptoQuant’s core recommendation is for Strategy to temporarily halt Bitcoin accumulation, rebuild its cash buffer, and resume purchases only under a more structured, timing-based framework rather than continuous buying.

It also notes that STRC dividends are cumulative, meaning missed payments must eventually be repaid, making suspension unlikely due to reputational risk among preferred investors.

The report is more critical than Benchmark-StoneX’s recent analysis, which dismissed comparisons between STRC and Terra’s collapse and instead described Strategy’s model as strained but not broken.

Overall, CryptoQuant’s suggestion would mark a major shift from Strategy’s long-standing approach. The company has steadily accumulated Bitcoin, building a position of roughly 847,000 BTC, with Michael Saylor’s strategy centered on relentless buying. A pause to rebuild liquidity would stabilize STRC but materially reshape that strategy.