Analyst Suggests Strategy Pause Bitcoin Purchases, Prioritize Repairing Cash Reserves and STRC Discount
Miles Bennett
CryptoQuant head of research Julio Moreno is calling on Strategy to stop buying Bitcoin immediately and rebuild its $1.4 billion cash reserve to $2.8 billion — the world's largest corporate Bitcoin holder faces a record 17.5% discount on its STRC preferred stock and mounting questions about whether its funding model can survive.
$11 billion in unrealized losses — what went wrong?
Strategy holds roughly $57 billion in Bitcoin, one of the largest corporate positions globally, yet its unrealized losses have reached $11 billion.
This means → buying heavily at cycle peaks while continuing to accumulate through the bear market is now dragging down the entire balance sheet.
In May the company repurchased $1.5 billion in 0%-coupon convertible senior notes due 2029, further draining its cash buffer.
In plain terms = Bitcoin fell and cash went out the door at the same time — the safety cushion is shrinking from both sides.
STRC's record discount — what is the market worried about?
STRC preferred stock briefly hit $82.50 last week, a 17.5% discount to its $100 par value — an all-time low. By Tuesday's close the discount was still near 13%.
STRC currently pays an 11.5% annualized yield, reset monthly and raised multiple times since listing to attract capital for Bitcoin purchases. At the current discount, the effective yield is roughly 13.17%.
This means → the market does not believe that yield can be honored long-term. The deeper the discount, the louder the doubt about dividend sustainability.
Common stock MSTR fell to its lowest since May 2024 in tandem. This reflects pressure across the entire funding chain, not just the preferred shares.
What is the analyst's prescription?
Moreno's core recommendation: stop buying Bitcoin immediately and prioritize rebuilding dollar cash reserves.
His specific target is raising reserves from the current $1.4 billion to roughly $2.8 billion — enough to cover 24 months of STRC dividends.
In plain terms = prove you can pay the interest first; only then will the market trust the stock again.
He also argues Strategy needs a "fundamentals-driven" buying framework instead of buying whenever funds are available. This means → purchase timing should follow the market cycle, not the fundraising cadence.
How long can the "never sell" narrative hold?
In early June, Strategy sold 32 Bitcoin for the first time since 2022. The amount is trivial relative to its $57 billion position, but it cracked founder Michael Saylor's core "never sell" narrative.
The company kept buying afterward: between June 15 and 21 it raised $34.9 million by selling Class A common stock to purchase more Bitcoin, while adding $300 million to cash reserves. That marked the third consecutive week of common-stock-funded purchases.
This means → the company is simultaneously selling equity to buy coins and being forced to sell coins — two contradictory moves that undermine market confidence in its strategic coherence.
Content is for reference only, not financial advice.