Strive CEO Matt Cole described the sharp selloff in Bitcoin-digital credit instruments STRC and SATA as a leverage-driven liquidation rather than a deterioration in issuer credit quality, after both products broke materially below their intended trading areas before rebounding. The episode marked one of the first major stress tests for the young market in Bitcoin-linked preferred-equity products, a segment built around liquid, yield-bearing instruments that issuers have positioned as relatively stable sources of capital.
Strive CEO Says Digital Credit Selloff Was Leverage Flush
Cole, chief executive of Strive, said in an X post that “today was the most difficult day in the history of Digital Credit,” noting that STRC traded as low as $82.50 before recovering sharply, while SATA fell from par into the low $90s before also rebounding. Separate market figures cited for the June 18–19 stress event put STRC’s intraday low at $82.61 and SATA’s at $92.92. Cole’s central argument was that the price action reflected forced deleveraging rather than a credit event at the issuer level.
“What happened today was a leverage liquidation event, not a deterioration in underlying credit quality,” Cole wrote. “There is an old saying in income markets that the road to hell is paved with carry. When investors discover an asset that offers attractive yields, relatively low volatility, and strong underlying credit characteristics, many eventually decide that owning it is not enough.” He argued that investors borrowed against the instruments to enhance returns, creating conditions for margin calls and forced selling once prices moved against leveraged holders.
Cole compared the dynamic to episodes in traditional finance where leveraged positions in high-quality assets, including U.S. Treasuries, have contributed to hedge fund failures. “When markets move against leveraged holders, forced selling can create a cascade. Prices fall, margin calls increase, more selling occurs, and the cycle feeds on itself. The selling becomes disconnected from fundamentals and becomes driven by balance sheet constraints.” In Cole’s framing, the selloff showed liquidity and leverage risk in a developing market, not a sudden impairment of the underlying issuers’ ability to meet obligations.
STRC and SATA Rebound After Forced Selling Cascade
STRC is Strategy’s Variable Rate Series A Perpetual Stretch Preferred Stock, a preferred-equity instrument placed in July 2025 at $90 per share with a stated amount, or target value, of $100. Strategy has described STRC as a variable-rate perpetual preferred stock whose dividend began at 9.00% annually and can be adjusted monthly with the aim of keeping the instrument trading near $100; by June 2026, the annualized variable dividend rate stood at 11.50%. Strategy has also stated that STRC is not collateralized by its Bitcoin holdings, meaning holders have a preferred claim on residual company assets rather than a claim on separately pledged Bitcoin.
SATA is Strive’s comparable digital credit product, described by Strive as a publicly traded, liquid preferred-equity instrument with a 13% APR. Since June 16, 2026, Strive has said SATA’s dividend is paid each business day, or roughly 250 times per year, rather than monthly. Cole emphasized that Strive’s own position had not changed during the selloff: “At Strive, our dividend reserves remain intact. Our company is not under stress. We remain well positioned to meet our obligations and continue executing our strategy.” He added that the “underlying credit profile remains substantially unchanged” from before the volatility.
The pressure on STRC matters because the product has served as an important financing channel for Strategy. When STRC trades near or above $100, Strategy can sell additional shares through at-the-market programs and use proceeds for purposes including Bitcoin purchases and working capital; when the instrument trades materially below par, that channel becomes less effective. C
oinDesk reported that Strategy paused STRC ATM issuance after the product fell below its $100 par value, and also reported that Strategy sold 32 BTC for roughly $2.5 million in early June to fund preferred-stock dividends, its first publicly disclosed net Bitcoin sale in years. Michael Saylor, Strategy’s executive chairman, has previously characterized such sales as economically minor in an interview, saying in substance that even if dividends were funded through Bitcoin sales, the company would still be buying far more Bitcoin than it sold.
Cole’s message to the market was that a liquidation event and a credit event should not be treated as the same thing. “No one knows with certainty whether today’s lows will ultimately prove to be the bottom. What is clear is that there was substantial demand at those prices. Both STRC and SATA experienced significant buying interest off their intraday lows, resulting in sharp recoveries.” The rebound does not remove the structural questions now facing digital credit products, including liquidity depth, capital-market access, Bitcoin-linked balance-sheet risk and dividend sustainability, but it does clarify the debate: whether the selloff was mainly a forced-selling cascade, as Cole argues, or an early warning about the fragility of preferred-equity structures built for stability in a volatile crypto capital market.
AI Transparency Note: This article was prepared with the assistance of an AI system based on the sources listed and was reviewed, edited, and approved by a human editor before publication. All quotes, data points, and factual claims are intended to be grounded in the cited source material; however, errors cannot be ruled out entirely.
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