Thursday was brutal for “digital credit” products — and Strive CEO Matt Cole didn’t sugarcoat it. He called it the “most difficult day in the history of digital credit.” The culprit, according to him: leveraged positions unwinding, not any problem with the underlying credit quality.
Strive’s SATA and Strategy’s STRC — preferred equity instruments designed to trade around $100 — both plunged well below their par values. SATA sank as low as $92.88. STRC dropped even further, hitting $82.53 before closing at $88.59.
“Many eventually decide that owning it is not enough. They borrow against it. They lever it,” Cole wrote on X. “That works until it doesn’t.”
The trading volume told the story. SATA notched its second-largest trading day ever at $153 million. STRC did $941 million — its fourth-largest day. Compared to the much smaller daily volumes of similar instruments from JPMorgan and BlackRock, those numbers scream leverage unwind.
Strive’s Chief Risk Officer Jeff Walton put it bluntly: “Leverage appears to have been flushed, fundamentals intact, and the instruments absorbed the flow and found bids throughout the day.”
Here’s the catch though. These products are designed to help Strive and Strategy raise funds to accumulate more Bitcoin. They’ve attracted everyday investors who want dividend yields without the wild swings of holding BTC directly. But questions about how those dividends will actually get paid have created real skepticism.
Last month, Strategy sold 32 BTC for $2.5 million after Michael Saylor telegraphed the move — proving his firm could break from its famous “never sell” mindset if it had to. The firm has been hammering the message that it can meet its obligations, but the market isn’t buying it right now.
At Thursday’s close, Strategy’s common shares (MSTR) fell another 3.46% to $112.53 — now down more than 32% in the last month. Strive (ASST) dropped 3.8% to $14.85, with monthly losses near 6%. U.S. markets were closed Friday for Juneteenth.
Strive did not immediately respond to requests for comment.
