MicroStrategy's Bitcoin Bet Backfires as STRC Hits Record Low
In brief
- STRC fell to record low of $79.85 Wednesday amid Bitcoin weakness and cash pressures
- CryptoQuant analyst warns MicroStrategy must halt Bitcoin purchases and rebuild cash reserves
- Dividend coverage collapsed from 7 years to 14 months as obligations nearly quadrupled to $1.2 billion annually
- Common stock tumbled 80% from peak as Bitcoin holdings sit roughly $13 billion underwater
The Collapse in Numbers
STRC fell to a record low of $79.85 on Wednesday, a day when Bitcoin tumbled 4% to its lowest level in over a month at $59,175. The product, which currently offers an 11.5% annual dividend, has struggled to trade at or above its $100 par value over the past month. Strategy's common stock price tumbled more than 10% to a 27-month low of $92.28, representing a nearly 80% decline from a multi-year peak of $457.22 last year.
The damage runs deeper than price charts. Strategy's dividend obligations have nearly quadrupled to $1.2 billion annualized since early 2026, while cash reserves have shrunk. Dividend coverage collapsed from more than 7 years at the start of 2026 to just 14 months today. That's a runway problem.
What the Analyst Says
CryptoQuant's Head of Research Julio Moreno argued that Strategy should stop purchasing Bitcoin immediately and focus on shoring up cash. "If the world's largest corporate holder of Bitcoin wants to take pressure off Stretch (STRC), it needs to stop purchasing the digital asset immediately and focus purely on shoring up cash," Moreno said in a note.
His prescription: accumulate cash reserves lasting 24 months. Moreno emphasized that a higher cash reserve is the most direct signal the market needs to regain confidence in STRC.
The Underwater Position
Strategy currently owns 847,363 Bitcoin. With Wednesday's price drop, that stockpile was worth $50 billion, but the firm's Bitcoin holdings sit approximately $13 billion underwater—meaning the market value of its holdings fell below the company's cost basis.
The problem isn't just illiquidity. Investors were spooked this month when the company announced that it had sold 32 Bitcoin for $2.5 million, signaling that Strategy was already forced to trim positions to meet obligations. Since its introduction less than a year ago, Strategy has issued more than $10 billion of the STRC product.
The math is unforgiving. At the start of 2026, the firm had earmarked $2.2 billion for managing debt and dividend payments. That cushion has eroded as the dividend base exploded. Strategy did shift gears to accumulate cash for three straight weeks earlier this month, but the market's reaction to STRC's price action suggests investors aren't convinced the pivot is fast enough.
