CryptoQuant, the on-chain analytics firm, is urging Strategy to pause its Bitcoin purchases and focus on rebuilding cash reserves. The warning comes as Strategy holds roughly $10.6 billion in unrealized losses on its Bitcoin stash, and CryptoQuant says the company's dividend coverage is at risk of collapsing. The firm also argues that Strategy needs clearer rules for when to buy and sell Bitcoin.
The $10.6 billion hole
Strategy's Bitcoin bet has turned sour. The company's unrealized losses now total $10.6 billion, according to CryptoQuant's analysis. That's a massive paper loss for a firm that has positioned itself as a corporate Bitcoin treasury play. The losses eat into the equity cushion that supports Strategy's dividend payments.
Dividend coverage at risk
CryptoQuant's core warning is about dividend coverage. The firm says that if Bitcoin prices stay low or fall further, Strategy may not have enough cash flow to cover its dividend obligations. The company has been funding its Bitcoin purchases partly through debt and equity raises, but the returns from its core business haven't kept pace. A collapse in dividend coverage would spook income-focused investors and could trigger a sell-off in Strategy's stock.
Calls for clearer rules
Beyond the immediate cash crunch, CryptoQuant is pushing for a more disciplined approach. The analytics firm says Strategy needs explicit buy and sell rules for its Bitcoin holdings. Right now, the company's strategy appears to be 'buy and hold forever,' with no clear trigger for taking profits or cutting losses. CryptoQuant argues that a set of transparent rules would help investors understand the risk and give management a framework to act rationally when markets turn.
Strategy hasn't publicly responded to CryptoQuant's report as of Friday. The company's next earnings call is expected in early August, and investors will likely press for answers. Will CEO Michael Saylor heed the warning and pause purchases? Or will he double down on the Bitcoin accumulation strategy that has defined the firm? For now, the market is watching — and waiting.
