Bitcoin: CryptoQuant urges Saylor to suspend purchases

The institutional bitcoin accumulation strategy, long presented as the driving force of the crypto market, is today facing its first structural limits in the face of the reality of current financial obligations. In an increasingly demanding market, the cash management of large listed companies is becoming just as important an indicator as the quantity of cryptos held. It was in this particularly tense atmosphere that CryptoQuant, an on-chain analysis company, publicly advised Strategy to stop its bitcoin purchases. This alert exposes a critical imbalance between the collapse of the company's dollar cash reserves and the explosion of its dividend payment obligations.

Treasury under pressure in the face of the explosion of financial obligations

The report published by Julio Moreno, CryptoQuant's research director, highlights a rapid deterioration in Strategy's liquidity indicators, as STRC attracts bearish bets. The company presents an accounting situation marked by several essential data:

• A fall in cash reserves: The company's dollar cash reserves have fallen 38% since the start of the year;
• Bond buyback: this drop is explained by the buyback of $1.5 billion of its 0% convertible senior bonds maturing in 2029;
• A dividend explosion: To finance its bitcoin acquisitions, the massive issuance of STRC preferred stock increased annual dividend obligations from $300 million to nearly $1.2 billion;
• The collapse of coverage: The coverage of STRC preferred stock dividends by available cash has collapsed, going from more than seven years to just 14 months.

Julio Moreno estimated that to bring coverage back to 24 months at the current pace of commitments, the company would need about $2.8 billion in cash reserves, almost double its current level. The expert would like to emphasize that it is extremely unlikely that such a suspension of cumulative dividends would take place, as it would destroy the credibility of the company, and assures “that a higher liquidity reserve is the most direct signal the market needs to regain confidence in STRC”. This imbalance generates an effect which now alarms traditional financial markets.

The trap of unrealized losses and the crisis of market confidence

Beyond cash flow, the valuation of Strategy's assets is taking the full brunt of the market correction, which is causing a crisis of investor confidence. STRC preferred stock lost as much as $82.50, an unprecedented 17.5% discount to its $100 face value.

Its recent purchases will weigh even more on the company's finances as it records an overall unrealized loss of around $10.6 billion on its bitcoins. All tokens purchased during the years 2024, 2025 and 2026 are today below their purchase price. Julio Moreno warns in the face of this situation, against the option of selling assets to replenish cash. “Any forced sale of Bitcoin at current prices would crystallize these losses on a large scale and destroy shareholder value”he explains.

This situation is shaking the company's image on Wall Street where Strategy's business model is increasingly perceived as risky by traditional investors. Absolute dependence on the first crypto generates volatility that is poorly supported by the bond market, especially when liquidity becomes scarce. The discount on STRC stock reflects growing skepticism about the company's ability to continue its pace of aggressive acquisitions. Without rapid stabilization of prices or provision of new liquidity, the financial structure of the firm could be put to the test, forcing management to readjust its operational priorities in order to reassure its creditors.

CryptoQuant's strategic recommendations for the future

In order to turn things around, CryptoQuant's research director gave several direct pieces of advice to the company's executives. The firm first advises temporarily suspending bitcoin purchases until dollar reserves and dividend coverage are restored.

Next, CryptoQuant encourages a move from opportunistic purchases dictated by the availability of capital alone to a systematic approach guided by mathematical models, even noting with humor that “Strategy always buys the local top has become a real meme in the market”. He says on this subject that “buying as soon as capital is available is not a strategy, it is a recipe for accumulating at cycle peaks”. Finally, the report advocates establishing a strict framework for selling portions of bitcoin during upcoming bull markets in order to realize gains, reduce leverage, and replenish liquid reserves for correction periods.

Analyzing this situation requires a nuanced approach to the prospects of Michael Saylor's firm, which still has financial leverage without having to liquidate its cryptos. Indeed, the company already has two levers to reassure the markets about its solvency: increase the current yield on its dividends (11.5%) or issue new MSTR ordinary shares.

However, “returning to 100 dollars is not easy”recalls Moreno. This observation echoes the warnings of JPMorgan analysts who, after a symbolic sale of 32 bitcoins by the company intended to reassure preferred shareholders, had already stressed that Strategy must imperatively replenish its dollar reserves in order to restore confidence. The company's future will depend on its ability to reconcile its ideological commitment to bitcoin with rigorous management of its traditional accounting obligations.