CryptoQuant Flags Risk as Cboe Eyes Perpetual Futures and Strategy's Dividend Cushion Narrows

CryptoQuant is warning investors that MicroStrategy-linked holding company Strategy's ability to fund its aggressive Bitcoin buying spree may be in jeopardy. The analytics firm argues that Strategy's dividend coverage has tightened sharply, from about seven years to roughly 14 months.

This deterioration is attributed to the company's recent issuances of STRC preferred shares with an 11.5% yield, which have increased annual dividend obligations to approximately $1.2 billion. Additionally, Strategy repurchased $1.5 billion of its 2029 senior notes, further reducing its cash reserves.

CryptoQuant CEO Ki Young Ju noted that while Strategy's cash position has weakened, it rebounded to around $1.4 billion after recent MicroStrategy share sales. However, this reserve remains down 38% year-to-date, highlighting the company's financial strain.

The potential constraint on Strategy's ability to fund itself through preferred-share issuance is also a concern. STRC preferred shares recently traded as much as 17.5% below their $100 par value, which could limit the company's capacity to raise fresh capital through additional preferred stock sales.