Crypto Biz: The cost of stacking sats

CryptoQuant urged Strategy to pause Bitcoin buying as dividend coverage shrank. Meanwhile, CBOE eyes crypto perpetual futures and Chainlink joins a stablecoin FX project.

This week, crypto analytics company CryptoQuant challenged the prevailing narrative around Michael Saylor’s Strategy, urging the company to pause Bitcoin purchases and rebuild its cash reserves. The warning came after its dividend coverage fell to just 14 months from roughly seven years.

Strategy isn’t facing an immediate cash crunch, but CryptoQuant’s warning puts the spotlight on the financing structure behind its Bitcoin strategy. With cash reserves shrinking and dividend obligations increasing, Strategy’s ability to keep funding new purchases is drawing closer scrutiny.

The rest of this week’s Crypto Biz shows how the industry is evolving. CBOE is eyeing perpetual Bitcoin and Ether futures, Chainlink is working with European and Korean banks on stablecoin-based FX settlement and Zcash miner Fortitude is heading to Nasdaq through an unlikely merger with a healthcare company.

Earlier this week, CryptoQuant argued that Strategy’s aggressive Bitcoin accumulation has become increasingly difficult to sustain, urging the company to rebuild its cash reserves after dividend coverage fell to just 14 months from roughly seven years.

CEO Ki Young Ju said the Strategy’s cash position has deteriorated as annual dividend obligations surged to $1.2 billion following large issuances of STRC preferred shares carrying an 11.5% yield. While Strategy’s cash reserve recovered to about $1.4 billion after recent MSTR share sales, it remains down 38% year-to-date after the company repurchased $1.5 billion of its 2029 senior notes.

The warning comes as Strategy’s funding model faces additional pressure. STRC preferred shares recently fell as much as 17.5% below their $100 par value, limiting the company’s ability to raise fresh capital through additional preferred stock sales. 

Strategy’s cash reserve and dividend coverage. Source: CryptoQuant

The Chicago Board Options Exchange (CBOE) is weighing a plan to convert its continuous Bitcoin and Ether futures into perpetual futures, according to a Wall Street Journal report.

The potential move follows recent regulatory changes after the US Commodity Futures Trading Commission approved crypto perpetual futures for Kalshi and outlined a framework for other registered exchanges to offer similar products.

CBOE launched its continuous Bitcoin and Ether futures last December, with contracts extending as far as 10 years. Unlike traditional futures, perpetual contracts have no expiration date, allowing traders to maintain leveraged positions indefinitely. They were first popularized by crypto derivatives platform BitMEX and have since gained traction across both centralized and decentralized markets. 

Perp volumes have surged across DeFi exchanges. Source: DeFiLlama