Key facts
- Digital credit products STRC and SATA experienced a significant selloff.
- Strive CEO Matt Cole attributed the selloff 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 $82.53 and SATA dropped to $92.88 before both products rebounded to $88.59 and $97.71 respectively by the close. Both products are designed to trade around their $100 par value and offer attractive yields. Cole explained that investors often use 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. Both SATA and STRC saw outsized trading volumes on Thursday, with $153 million and $941 million respectively, suggesting a significant unwind of leveraged positions.