CoinDesk
Strive Asset Management CEO Matt Cole called Thursday "the most difficult day in the history of Digital Credit," blaming a leverage-driven liquidation rather than any deterioration in issuer credit quality for the sharp selloff in Strategy's preferred-equity vehicle STRC and Strive's own SATA.
STRC fell as low as $82.50 before recovering to around $89, while SATA dropped below $93 before rebounding to roughly $97; both instruments are designed to trade close to their $100 par. Cole framed the move as a self-reinforcing margin-call cascade: investors had levered up to capture double-digit yields, and once prices slipped, forced selling pushed the mark further away from fundamentals.
Why it matters
"What happened today was a leverage liquidation event, not a deterioration in underlying credit quality," Cole wrote on X, drawing an explicit parallel to historical hedge-fund blowups around leveraged U.S. Treasury positions where the underlying credit stayed intact through the dislocation. The thesis matters beyond these two tickers — digital-credit yields have been a structural draw for carry-seeking capital since the Strategy/MicroStrategy preferred-equity model scaled, and the speed of Thursday's round-trip is the first real test of how much of that bid was levered paper versus genuine long-only demand. Cole added that Strive's own dividend reserves and company balance sheet "remain intact," with "no stress" on the issuer side.
Market impact
The intraday shape is the read: both STRC and SATA rebounded aggressively off their lows as buyers stepped in, which Cole cited as evidence that demand for digital-credit exposure stayed intact even as the leverage unwound. "A liquidation event and a credit event are not the same thing," he wrote, framing the episode as a reminder that in income markets, "the road to hell is paved with carry." For the broader RWA-perp complex — which just printed record May volume even as spot digital-credit instruments whipsawed — the open question is whether yield-chasing allocators re-add the leverage that drove Thursday's drawdown, or rotate into less margined structures for the same exposure.
Frequently asked questions
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What happened to STRC and SATA on Thursday?
Both digital-credit instruments sold off sharply intraday — STRC fell as low as $82.50 before recovering to ~$89, and SATA dropped below $93 before rebounding to ~$97. Both products are designed to trade near their $100 par value.
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Did Strive CEO Matt Cole say the selloff was a credit event?
No. Cole explicitly called it a leverage liquidation event, not a deterioration in underlying credit quality, and said the firm's dividend reserves and balance sheet remain intact.
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Why did the digital-credit market sell off if credit quality was fine?
Cole said investors had used leverage to amplify the products' double-digit yields, and once prices slipped, margin calls triggered forced selling — a self-reinforcing move detached from issuer fundamentals.
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How did STRC and SATA recover from their lows?
Both instruments saw aggressive buying interest off their intraday lows, rebounding sharply before the day ended. Cole read that bid as evidence real demand for digital credit stayed intact through the dislocation.
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How did Cole frame the episode historically?
Cole compared Thursday to past hedge-fund blowups around leveraged U.S. Treasury positions, where the underlying Treasury credit remained sound through the stress — and quoted the income-market adage that "the road to hell is paved with carry."
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