Key facts
- Digital credit products STRC and SATA experienced a significant selloff.
- Strive CEO Matt Cole stated the selloff was due to leverage liquidations and margin calls.
- STRC fell to $82.50 and SATA dropped to $93 before rebounding.
- Cole emphasized that the event was not a credit deterioration and that Strive's dividend reserves are intact.
Digital credit products STRC and SATA experienced a significant selloff on Thursday, with Strive Asset Management CEO Matt Cole attributing the decline to leverage liquidations and margin calls rather than a deterioration in underlying credit quality. STRC fell as low as $82.50 and SATA dropped below $93 before both products rebounded to $89 and $97 respectively by the close. Both products are designed to trade near their $100 par value and offer double-digit yields. Cole explained that investors increasingly used leverage to enhance returns, and when prices began to fall, margin calls triggered forced selling, creating a self-reinforcing decline. He characterized the event as a "leverage liquidation event," distinct from a credit event, and assured that Strive's dividend reserves remain intact and the company is not under stress. Cole drew a comparison to past market dislocations involving leveraged Treasury positions, noting that Treasury securities themselves remained strong credits despite periods of stress. The sharp rebound from intraday lows suggests significant buying interest emerged as prices declined.