[Digital Today reporter Yeseul Kim] An analysis said Strategy common stock MSTR could fall by around 80% as it shows a head-and-shoulders pattern similar to the period just before the dotcom bubble burst.

Cointelegraph reported on Tuesday that shrinking cash holdings and a growing preferred dividend burden are also heightening concerns about dilution for existing shareholders.

MSTR’s monthly chart has formed a head-and-shoulders pattern since March 2024. The key support neckline is in the $100 to $105 range. If the stock decisively falls below that range, it could confirm a bearish trend. The medium- to long-term downside target was put at around $20, about 80% below current levels.

The chart structure is also similar to the head-and-shoulders top Strategy formed during the dotcom bubble. At the time, after breaking below a similar neckline, the stock fell more than 99% from its peak over two years.

Financial pressure is also increasing. CryptoQuant analyst Julio Moreno (훌리오 모레노) assessed that as of June, Strategy’s dollar cash holdings were down 38% from early 2026, while its annual dividend obligation nearly quadrupled to close to $1.2 billion. Strategy mainly uses that cash to pay dividends on its Stretch (STRC) preferred shares.

The preferred dividend coverage period has shrunk from more than seven years to about 14 months. That means current cash holdings would cover STRC dividends for a little over a year. STRC fell to $82.50 last week to hit a record low and then stayed in the $82 to $89 range. That is well below its $100 par value. As a result, its effective yield rose above 13%, higher than the stated dividend rate of about 11.5%.

Strategy is raising cash through common share issuance and dividend-rate adjustments rather than selling bitcoin. In June it sold 2.71 million MSTR common shares for about $335.5 million, and spent only $34.9 million of that to buy 520 BTC. The company bought 847,363 BTC at an average of about $75,650 per coin. The current bitcoin price is about $62,600.

If STRC stays below $100, Strategy will have to keep issuing more common shares, slow the pace of bitcoin purchases, or rebuild cash holdings. All of those options could weigh on MSTR shares.