The cash reserve of Strategy has decreased by 38%, and the volume of upcoming dividend payments is approaching $1.2 billion. Against this backdrop, MSTR shareholders face an increased risk of further dilution of their stake.
At the same time, the shares of Michael Saylor’s company are forming a technical pattern that was last seen before a nearly 99% collapse during the dot-com bubble crash in the early 2000s.
Bearish MSTR Pattern Points to 80% Downside Risk
As of the end of June, a classic head and shoulders pattern has started to form on the monthly chart of MSTR. In technical analysis, it is often considered a signal of a possible downward reversal.
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This pattern consists of three peaks. The central peak is called the “head” and is higher than the two side peaks, which are called “shoulders.” A neckline runs between them, which is the support level connecting the main local lows.
Usually, the pattern is considered confirmed after the neckline is broken. In the classic scenario, after such a signal, the price may fall by approximately the distance from the top of the “head” to the neckline.
Monthly chart of MSTR stock. Source: TradingView.
Since March 2024, the “head and shoulders” pattern has almost fully formed on the MSTR chart. The key zone now remains the support in the range of $100–105, which corresponds to the neckline.
If the price firmly consolidates below this level, the pattern will be considered confirmed. In the classic scenario, this opens the way for a deeper and more prolonged correction. The target is around $20, which is about 80% below current levels.
Analysts also note that this pattern is reminiscent of the dot-com bubble era. Back then, MSTR stock formed a similar “head and shoulders” pattern, after which it broke the neckline and lost more than 99% of its value over the next two years.
Monthly chart of MSTR stock dynamics. Source: TradingView.
Strategy’s Shrinking Cash Reserves Increase MSTR Dilution Risk
Additional pressure on MSTR is being created by the worsening financial situation within Strategy itself. The company’s cash reserve is shrinking, while expenses for preferred stock dividend payments continue to rise. This increases the likelihood of new share issuances and, as a result, dilution of existing shareholders’ stakes.
According to analyst CryptoQuant Julio Moreno, by June, Strategy’s cash reserve in US dollars had fallen by 38% compared to the start of 2026. At the same time, annual obligations for dividend payments almost quadrupled and reached $1.2 billion.
Strategy cash reserve and dividend coverage. Source: CryptoQuant.
The company uses its cash reserves to pay dividends on preferred shares, primarily on Stretch (STRC).
According to Moreno, dividend coverage for these securities has dropped from more than seven years to about 14 months. In other words, Strategy now has enough cash to cover STRC payments for just over a year.
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This pressure is already visible in the market price of STRC. Last week, the securities fell to a record low of $82.50, and then mostly traded in the range of $82, $89. This is significantly below their nominal value of $100.
STRC price and dividend yield. Source: STRC.LIVE.
The drop in STRC price has led to its actual yield exceeding 13%, although the stated dividend rate is about 11.5%. This indicates that investors are demanding a higher yield to continue holding these securities.
According to analyst Julio Moreno:
“With current annual dividend obligations of $1.2 billion, to restore the liquidity buffer to at least 24 months, Strategy would need about $2.8 billion in cash reserves. That is about twice what the company currently has.”
He also noted:
“It is precisely an increase in the cash reserve that will be the most obvious signal to help the market regain confidence in STRC.”
Currently, Strategy owns 847,363 BTC purchased at an average of $75,650 per coin. At the current bitcoin price of about $62,600, selling part of the reserves would mean locking in losses and would call into question the company’s long-term BTC accumulation strategy.
Instead, Strategy raised the dividend rate on STRC and continued to issue new MSTR shares to attract additional capital. In June, the company issued 2.71 million MSTR shares, raising about $335.5 million. Of this, only $34.9 million was used to purchase 520 BTC.
This approach allows the company to retain almost its entire bitcoin reserve, but at the same time increases the risk of dilution for existing MSTR shareholders.
If STRC continues to trade below the nominal $100, the company will likely have to keep issuing new shares, reduce the volume of bitcoin purchases, or build up cash reserves. Any of these options could increase pressure on MSTR, especially if the technical picture continues to deteriorate.
