Strategy Faces Pressure Over Bitcoin Losses and STRC Discount

Cash reserves and STRC coverage draw scrutiny

Julio Moreno, head of research at CryptoQuant, said Strategy’s preferred stock STRC fell to $82.50 last week, a record 17.5% discount to its $100 par value. Moreno linked the move to bitcoin bear-market pressure and a sharp decline in the company’s cash reserves.

Strategy recently repurchased $1.5 billion of its 0% convertible senior notes due in 2029, reducing the cash buffer available to support STRC dividend payments. CryptoQuant said Strategy’s cash reserves have fallen 38% since the start of 2026, while annualized dividend obligations have moved sharply higher.

Strategy’s annualized dividend obligations have increased from about $300 million at the start of 2026 to roughly $1.2 billion today, according to Moreno. Strategy’s STRC dividend coverage has fallen from more than seven years at the start of 2026 to 14 months.

Moreno estimated that Strategy would need about $2.8 billion in cash reserves to restore 24 months of STRC dividend coverage, roughly double its current cash level at the current annual dividend burden. “A higher cash reserve is the most direct signal the market needs to regain confidence in STRC,” Moreno said.

Strategy can technically suspend STRC dividends, but Moreno said the dividends are cumulative and would still need to be paid later. Moreno also said selling bitcoin to rebuild cash would be a poor option because the company has an aggregate unrealized bitcoin loss of about $10.6 billion, with all bitcoin bought during 2024, 2025 and 2026 currently underwater.

“Any forced Bitcoin sale at current prices would crystallize these losses at scale and destroy shareholder value,” Moreno said.

Moreno said Strategy is not obligated to sell bitcoin to support STRC and could instead raise the current 11.5% dividend yield or issue MSTR stock to show it can continue paying dividends. He said both tools are already being used, but added, “However, the path back to $100 is not straightforward.”

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CryptoQuant urges a pause in bitcoin purchases

Moreno gave Strategy what he called “some unsolicited advice,” starting with a recommendation to pause bitcoin purchases until cash reserves and dividend coverage are restored. He also recommended that Strategy adopt a systematic, model-driven bitcoin purchase-timing framework instead of buying whenever new capital becomes available.

“‘Strategy always buys the local top’ has become a genuine market meme,” Moreno said. “Buying whenever capital is available is not a strategy — it is a formula for accumulating at cycle peaks.”

Moreno’s third recommendation was for Strategy to create a framework for selling portions of its bitcoin holdings during future bull markets. He said such a framework could allow the company to realize gains, reduce leverage and build cash reserves that could later be redeployed during market downturns.

JPMorgan analysts also said earlier in June 2026 that Strategy may need to rebuild dollar reserves to restore investor confidence after the company sold 32 bitcoin. JPMorgan analysts said the sale “spooked” markets, even though it was largely symbolic and intended to demonstrate Strategy’s commitment and flexibility to preferred stockholders.

Bitcoin losses deepen as STRC trades below par

Bitcoin slipped below the $60,000 zone on Wednesday, June 24, 2026, and touched an intraday low of $59,500. Strategy’s bitcoin treasury stood at 847,363 BTC, with the position carrying a $12.55 billion paper loss.

Strategy acquired its bitcoin reserves for $64.1 billion, but those holdings were valued at $51.55 billion as of June 24, 2026. The company’s average bitcoin purchase price was listed at $75,651 per coin, while BTC traded below Strategy’s cost basis.

Strategy continued buying despite the unrealized loss, adding 520 BTC this week after buying 1,587 BTC the previous week. BTC was described as down 51% from its October 2025 all-time high above $126,000.

BTC was also described as losing more than 42% over the past 12 months, with more than 30% of that decline happening over the past six months. The market outlook for BTC was described as bearish, with prediction-market odds suggesting bitcoin could sink much lower before reclaiming the $100,000 zone.

STRC was trading at $82.20 as of June 24, 2026, at 12 p.m. Eastern time. Its decline lifted the variable dividend from 11.5% to a current effective yield of 13.99%, indicating that investors were demanding a higher return for holding the preferred stock.

MSTR has fallen more sharply than BTC during the drawdown. Since July 16, 2025, BTC was down 42.77%, while MSTR was down 78.37%. MSTR traded at $455.90 per share on that date and was hovering near $98.59 as of June 24, 2026.

MSTR’s decline was attributed to its role as a leveraged bitcoin proxy, corporate-level frictions and the way it historically amplified bitcoin’s upside before amplifying downside during the downturn. MSTR was described as a high-beta bitcoin proxy that historically moved two to three times BTC’s gain or more during rallies.

BlackRock’s IBIT was presented as a cleaner BTC exposure because it is a pure, unlevered spot bitcoin ETF designed to track BTC’s spot price minus a modest expense ratio. MSTR, by contrast, was described as a leveraged, actively managed corporate bitcoin treasury play.

IBIT’s structure was contrasted with Strategy’s use of billions of dollars in new common-share issuance through at-the-market programs to keep buying bitcoin. IBIT share creation is driven by arbitrageurs, which lets it track BTC more cleanly.

The central market question is whether Strategy can keep financing its structure while BTC trades below cost basis, STRC remains below par and MSTR continues to trade like a leveraged risk asset. One line captured that pressure directly: “Markets are not punishing Strategy for holding bitcoin. They are pricing in the cost of holding it this way.”

Every new MSTR share issuance dilutes existing holders, every STRC discount signals higher demanded risk compensation, and every week BTC trades below Strategy’s cost basis makes the model more fragile. Michael Saylor and company have repeatedly said Strategy is not facing immediate danger, but the analysis warned that when leverage is involved and the underlying asset keeps falling, “the distance between confidence and distress can narrow quickly.”