Key Takeaways
- CryptoQuant warns Strategy to stop buying Bitcoin.
- STRC’s record-low price raises concerns about funding.
- Critics see broader risks for Bitcoin.
Shares of Strategy remained under pressure this week as crypto analytics firm CryptoQuant warned the company should halt further Bitcoin purchases and rebuild its cash reserves.
The warning comes as Strategy’s Stretch preferred stock (STRC) continues to trade at record lows, raising fresh questions about the sustainability of the financing model underpinning Executive Chairman Michael Saylor’s aggressive Bitcoin accumulation strategy.
Strategy’s Cash Should Be Priority
In a report published Monday, CryptoQuant said Strategy’s annualized dividend obligations have nearly quadrupled to $1.2 billion while its cash reserve has fallen 38% since the start of 2026.
“Strategy needs to stop buying Bitcoin and rebuild cash,” CryptoQuant wrote.
The firm argued that the company’s financial flexibility has deteriorated significantly as dividend commitments have expanded and available liquidity has declined.
According to CryptoQuant, Strategy’s dividend coverage has collapsed from more than seven years to just 14 months.
This has left the company increasingly dependent on capital markets to maintain investor confidence.
The firm said rebuilding cash reserves to approximately $2.8 billion — equivalent to around 24 months of dividend coverage — should become a strategic priority before further Bitcoin purchases are considered.
“Rebuilding the cash reserve is a necessary condition for STRC to recover,” CryptoQuant wrote.
The report also warned that Strategy’s Bitcoin holdings offer limited downside protection.
The company currently sits with an estimated $10.6 billion in unrealized losses on Bitcoin acquired in 2024, 2025, and 2026, according to CryptoQuant.
“Any forced BTC sale at current prices would crystallize large losses and destroy shareholder value,” the firm said.
STRC Continues Trading Near Record Lows
The warning arrives as STRC remains well below its intended $100 reference value, trading around $87.31.
STRC plays a critical role in Strategy’s broader Bitcoin acquisition strategy because preferred stock offerings have become one of the company’s primary mechanisms for raising capital to purchase additional Bitcoin.
When preferred shares trade materially below par value, Strategy’s ability to issue new securities becomes less attractive and potentially more expensive.
In recent weeks, investor concerns intensified after comments from Saylor resurfaced online showing he had relied heavily on AI while developing the mechanism.
“When we did Stretch, I designed all these with AI,” Saylor said during a May interview with CoinDesk.
“I used artificial intelligence, and I went back and forth with the AI for a few hours.”
According to Saylor, the AI responded that while no one had previously structured such a product, it was “totally legal” and “totally reasonable.”
Schiff and Other Critics See Growing Strategy Bitcoin Risks
Among the most vocal critics is economist and longtime Bitcoin skeptic Peter Schiff, who argues weakness in STRC could create a self-reinforcing negative cycle for both Strategy and Bitcoin.
“Bitcoiners are way too complacent,” Schiff wrote on X this week.
Adding: “MSTR, the biggest Bitcoin owner and its bridge to Wall Street, is collapsing.”
Following the latest decline in Strategy-linked securities, Schiff renewed his criticism.
“The financial house of cards Saylor built is collapsing,” he wrote.
Strategy Failure Means Bitcoin to $19,000?
Separately, crypto commentator Financelot described Strategy as entering the “final phase of collapse.”
He argued that sustained weakness in the company’s financing structure could eventually pressure Bitcoin itself if market conditions deteriorate further.
“What does this tell us about Bitcoin $BTC? Well, its dramatic collapse to $19,000 should begin soon,” he wrote.
According to many analysts, a collapse in Strategy would remove one of Bitcoin’s most prominent institutional buyers and could force investors away from the risk asset.
Strategy has not indicated that it plans to halt Bitcoin purchases in the long term, and Saylor continues to repeatedly defend its long-term accumulation strategy.
Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
