Digital credit selloff blamed on leverage liquidations, says Strive CEO

The digital credit market suffered one of its sharpest selloffs on Thursday, with Strive Asset Management CEO Matt Cole calling the move a leverage-driven liquidation rather than a sign of worsening credit fundamentals. Strategy's preferred equity STRC fell as low as $82.50 before recovering to $89, while Strive's SATA dropped below $93 and rebounded to $97; both products are designed to trade close to their $100 par value.

Cole said, "What happened today was a leverage liquidation event, not a deterioration in underlying credit quality." He argued that investors chasing the sector's relatively high yields—both products offer over double digit yields—used leverage to boost returns, and that margin calls prompted forced selling that amplified the price decline.

He likened the episode to historical hedge fund blowups involving leveraged U.S. Treasury positions, noting those securities remained strong credits through stress. "Our dividend reserves remain intact.

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