Strive Attributes Cryptocurrency Declines to Leveraged Liquidations

Strive's CEO, Matt Cole, recently attributed the sharp declines in their digital credit products, SATA and STRC, to widespread leverage liquidations. Despite these significant price drops, Cole emphasized that the underlying credit quality of these instruments remains sound. The firm's preferred shares and digital credit products, which typically aim for a stable trading value, experienced their most challenging day to date. This event highlights the inherent risks associated with leveraged positions in the cryptocurrency market, even for products designed to offer more stability. Strive plans to conduct a comprehensive analysis to better understand the dynamics of these liquidations.

Cryptocurrency Credit Products Face Turmoil Amidst Leverage Liquidations

On Thursday, June 19, 2026, the cryptocurrency market witnessed a turbulent day for "digital credit" preferred share offerings from prominent Bitcoin treasury entities, Strive and Strategy. Matt Cole, the CEO of Strive, identified a surge in leveraged liquidations as the primary cause behind the considerable price downturns of SATA and STRC, two of their flagship products. He robustly defended the intrinsic quality of these credit instruments, asserting that their sudden depreciation did not stem from any erosion in their fundamental value.

SATA and STRC, which are preferred equity and digital credit products from Strive and Bitcoin treasury leader Strategy, respectively, plunged significantly below their intended par values, set around $100 per share. SATA momentarily dropped to $92.88, while STRC saw an even steeper fall, hitting a daily low of $82.53 before closing at $88.59. This marked the most arduous day in the history of digital credit, according to Cole's statement on X.

Cole explained that investors often amplify their positions with borrowed capital, known as leveraging, when attractive yield opportunities with minimal volatility present themselves. This strategy, however, carries inherent risks, as he noted, "That works until it doesn't." The extraordinary trading volumes observed for both SATA and STRC on Thursday underscore the intensity of this market event. SATA recorded its second-highest trading day with $153 million, and STRC its fourth-largest with $941 million, figures that Strive's Chief Risk Officer, Jeff Walton, cited as indicative of a substantial leverage unwind.

Walton drew comparisons with the significantly lower daily trading volumes of more established preferred equity instruments, such as JPMorgan's JPM.PD and Blackrock's PFF, reinforcing the likelihood of a major liquidation event. He concluded that despite the turmoil, "Leverage appears to have been flushed, fundamentals intact, and the instruments absorbed the flow and found bids throughout the day."

While STRC often trades below its par value following its dividend date, analysts pointed out that ongoing uncertainty regarding Strategy's dividend payment mechanisms has contributed to sustained weakness. Last month, Strategy sold 32 BTC for $2.5 million, a move telegraphed by Michael Saylor, demonstrating the firm's willingness to deviate from its typical "never sell" stance to bolster cash reserves. However, even with reinforced cash holdings and continuous assurances about payment capabilities, both Strategy's common shares (MSTR) and preferred equity continue to underperform. MSTR closed Thursday down 3.46% at $112.53, reflecting a 32% loss over the past month, while Strive's ASST shares fell 3.8% to $14.85, accumulating nearly 6% in monthly losses.

The digital credit products were initially designed to facilitate Bitcoin accumulation for Strive and Strategy, attracting everyday investors seeking dividends and lower volatility compared to direct Bitcoin exposure or common equities. However, the recent events have sparked questions about the financial engineering underpinning these products, prompting Strive to commit to a more in-depth postmortem analysis of the concentrated leverage and its broader implications.

The recent upheaval in the digital credit market, exemplified by the plunges of SATA and STRC, serves as a stark reminder of the volatile nature of leveraged investments, even in seemingly stable financial instruments. While the underlying credit quality of these products may remain robust, the incident underscores the critical importance of understanding and managing leverage risks. For investors, it highlights the necessity of thorough due diligence and a cautious approach to high-yield opportunities that may involve significant borrowing. For firms operating in the digital asset space, it emphasizes the need for transparent communication regarding financial strategies, particularly concerning dividend mechanisms and risk management. This event could lead to a re-evaluation of leverage practices within the digital credit sector, fostering a more resilient and informed market environment in the long term.