Michael Saylor · Strategy · The Block
CryptoQuant confirms Strategy should pause bitcoin purchases and rebuild cash reserves
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Michael Saylor's Strategy should pause bitcoin purchases and focus on rebuilding its cash reserves as dividend obligations have increased, cash reserves have fallen and unrealized bitcoin losses have mounted, according to onchain analytics firm CryptoQuant.
Key facts
- At the current annual dividend burden of $1.2 billion, Moreno estimates Strategy would need about $2.8 billion in cash reserves to restore 24 months of dividend coverage, roughly double its current
- Moreno noted that Strategy recently repurchased $1.5 billion of its 0% convertible senior notes due in 2029, reducing the cash buffer available to support STRC dividends
- Moreno further said that selling bitcoin to rebuild cash reserves would not be a good option for Strategy as the company currently sits on an aggregate unrealized bitcoin loss of about $10.6 billion
- However, the path back to $100 is not straightforward," he noted
Summary
The recommendation comes as Strategy's preferred stock STRC fell to $82.50 last week, a record 17.5% below its $100 par value, after bitcoin bear market pressure coincided with a sharp decline in the company's cash reserves, Julio Moreno, head of research at CryptoQuant, said in a Tuesday report. Moreno noted that Strategy recently repurchased $1.5 billion of its 0% convertible senior notes due in 2029, reducing the cash buffer available to support STRC dividends. Meanwhile, Strategy's dividend obligations have also increased sharply because the company issued more STRC to fund bitcoin purchases. As cash reserves fell and dividend obligations increased, Strategy's STRC dividend coverage has dropped from more than seven years at the start of the year to 14 months, according to Moreno.