Key Takeaways:
Strategy's $1.5 billion debt buyback drained the cash buffer protecting its preferred-stock dividends, forcing a choice between Bitcoin purchases and shareholder payouts.
Strategy's perpetual preferred stock, STRC, fell to $82.50 last week, a record 17.5% discount to its $100 par value, as the company's cash reserve shrank 36% to $1.4 billion since the start of 2026.
"Rebuilding the cash reserve to about $2.8 billion, equal to 24 months of dividend coverage, is a necessary condition for STRC to recover," Julio Moreno, head of research at CryptoQuant, said in a research report.
The cash depletion followed Strategy's $1.5 billion repurchase of convertible senior notes due 2029 in May, which reduced debt but "severely reduced the cash buffer" available to support STRC dividends, Moreno said. The company now pays an 11.5% annual yield on STRC, reset monthly, translating to an effective yield of 13.17% at the current discounted price. Strategy's Bitcoin holdings, valued at about $57 billion, carry $10.6 billion in unrealized losses, meaning a forced sale would "crystallize large losses and destroy shareholder value," according to CryptoQuant.
The pressure leaves Strategy navigating a three-way trade-off between buying Bitcoin, preserving cash and avoiding dilution. The company bought $34.9 million of Bitcoin between June 15 and June 21, funded entirely through common stock sales, while also adding $300 million to its cash reserve. But Moreno argued that Strategy should pause Bitcoin purchases entirely until the cash buffer is restored, warning that buying at cycle tops has resulted in "rapid unrealized loss growth and deteriorating STRC fundamentals."
STRC closed at $87.31 on Tuesday, extending its 12% decline over the past month, according to Yahoo Finance data. The common stock, MSTR, fell below $100 in pre-market trading Wednesday for the first time since March 1, 2024, when it touched $99.20. MSTR has lost more than 70% of its value over the past year.
Strategy is not obligated to sell Bitcoin to support STRC's price, CryptoQuant said. The company can raise the current 11.5% dividend yield or issue more MSTR common stock to signal its ability to continue paying dividends — tools it has already begun deploying. Capital B shareholders have approved up to $120 billion in financing capacity for the company's Bitcoin strategy.
However, the path back to par "is not straightforward," Moreno said. The company's dollar cash reserve was established in December to ease investor concern but has since fallen sharply. A fourfold increase in STRC's annualized dividend obligations so far in 2026 has compounded the pressure, according to CryptoQuant.
The risk of pausing Bitcoin purchases carries its own consequences. Strategy's market appeal rests partly on the expectation that every new dollar raised will be deployed into Bitcoin, creating a self-reinforcing financing loop. A decision to stop buying, even temporarily, could interrupt that flywheel by making investors question whether the company is still maximizing Bitcoin exposure or shifting toward balance-sheet preservation.
This article is for informational purposes only and does not constitute investment advice.
