Analyst explains what Strategy stock needs to stop the bleeding

A brutal multiweek cryptocurrency drawdown has sent Strategy Inc MSTR into a freefall – with the company’s share price having crashed below the critical $100 threshold for the first time since 2024.

At the time of writing, MSTR stock is trading at a fresh 52-week low of about $87, while the firm’s flagship STRC preferred equity has also tanked to $74, representing a massive discount to its $100 par value.

In response to this compounding financial pressure, a blistering new CryptoQuant research report outlines what the corporate digital asset pioneer needs to stabilize its volatile financial foundations.

What might put a floor below Strategy stock price

CryptoQuant’s head of research, Julio Moreno, explicitly warned that Strategy must immediately halt its aggressive accumulation of Bitcoin to preserve capital.

“Strategy should develop a systematic, fundamental-driven approach to bitcoin purchase timing rather than buying whenever capital is available,” he argued in the latest report.

Moreno noted that indiscriminately buying near cycle tops and stacking tokens throughout initial stages of this bear market has expanded the firm’s aggregate unrealized losses to a massive $10.6 billion.

Strategy shares continue to bleed because all BTC the company has acquired since 2024 are now underwater – and relentless buying only accelerates financial strain and severely damages under-lying corporate metrics, he added.

Rebuilding cash reserve could drive MSTR shares higher

MSTR stock will remain under pressure until the firm successfully patches its rapidly deteriorating cash cushion to protect fixed-income investors.

According to Moreno, Strategy’s vital USD cash reserve has contracted by 38% since the start of the year, leaving just $1.4 billion on the balance sheet.

Concurrently, annualized dividend obligations on its high-yield preferred equity have quadrupled as massive amounts of STRC were issued to buy crypto.

This supply shock aggressively slashed the company’s dividend coverage runway from over seven years down to a mere 14 months.

To fully restore market confidence and revive STRC, Moreno notes the firm needs $2.8 billion in cash to establish 24 months of total coverage.

Wall Street hasn’t thrown in the towel on Strategy Inc

Despite growing skepticism from critics, some Wall Street analysts view the recent distress as a temporary funding friction rather than a structural failure.

Benchmark analyst Mark Palmer noted that while a discounted STRC slows down the company’s highly efficient “at-the-market” equity issuance engine, the overarching corporate model remains intact.

Bullish market participants emphasize that Strategy’s massive $50 billion Bitcoin treasury offers a substantial long-term buffer against acute liquidity stress.

OranjeBTC’s Sam Callahan also highlighted that buying heavily discounted tokens during market drawdowns remains an attractive strategy for long-horizon investors.

In short, Strategy stock must strike a delicate balance between aggressive digital asset accumulation and rebuilding its USD reserves to navigate this volatile environment.