Strategy faces mounting pressure to strengthen its balance sheet as rising dividend commitments and shrinking cash reserves raise fresh concerns among investors. The company’s preferred stock, STRC, recently dropped to $82.50, marking its deepest discount to the $100 par value on record.
While some market participants linked the decline to liquidations of leveraged positions during the broader Bitcoin downturn, CryptoQuant believes weakening fundamentals played a much larger role in the selloff.
According to CryptoQuant Head of Research Julio Moreno, Strategy’s financial flexibility has deteriorated significantly throughout 2026. The company increased its exposure to Bitcoin through additional financing activities, yet cash reserves moved in the opposite direction. Consequently, investors have started questioning the company’s ability to comfortably meet future dividend obligations.
Moreno highlighted a sharp rise in Strategy’s annualized dividend commitments. At the start of 2026, the company carried roughly $300 million in annual dividend obligations. Today, that figure stands near $1.2 billion, representing a fourfold increase in less than six months.
At the same time, Strategy’s cash reserves declined by 38% during the year. Additionally, the company recently used $1.5 billion to repurchase its zero-interest convertible senior notes due in 2029. That move reduced available liquidity and further weakened the cash cushion supporting dividend payments.
As a result, STRC dividend coverage fell dramatically. Moreno estimated that coverage declined from more than seven years at the beginning of the year to approximately 14 months today. He calculated that Strategy would need about $2.8 billion in cash reserves to restore two years of dividend coverage, nearly double its current level.
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Although Strategy holds one of the largest corporate Bitcoin treasuries, Moreno argued that selling Bitcoin would create additional challenges. The company currently carries approximately $10.6 billion in unrealized losses across Bitcoin purchases made during 2024, 2025, and 2026.
Therefore, any large-scale sale could lock in substantial losses and potentially damage shareholder value. Moreover, such a move could undermine the company’s long-standing Bitcoin accumulation strategy.
(adsbygoogle = window.adsbygoogle || []).push({});Instead, Moreno suggested that Strategy should temporarily halt Bitcoin purchases and prioritize rebuilding liquidity. He also recommended adopting a more disciplined framework for future Bitcoin acquisitions rather than deploying capital immediately whenever funds become available.
Beyond rebuilding cash reserves, Moreno urged Strategy to develop a long-term capital management plan. Such a framework could include taking partial profits during future Bitcoin rallies, reducing leverage, and replenishing reserves before market conditions weaken.
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