Digital Credit Market Faces Sharp Selloff as Leverage Liquidations Hit STRC and SATA

The digital credit market experienced one of its largest selloffs after heavy leverage liquidations pushed major preferred securities sharply lower during Thursday trading. Strategy’s preferred stock STRC dropped to an intraday low of $82.50 before recovering near $89, while Strive Asset Management’s SATA fell below $93 before rebounding to around $97.

Both investment products were originally structured to trade close to their $100 par value while offering double-digit yields to investors.

Strive CEO Says Credit Quality Remains Stable

Strive CEO Matt Cole said the decline was caused by forced selling tied to margin calls rather than weakness in company fundamentals. According to Cole, investors using leverage to increase returns were forced to sell positions rapidly as prices declined, creating a chain reaction across the market.

He compared the situation to previous leveraged selloffs in traditional bond markets, stressing that temporary liquidation pressure does not necessarily reflect deteriorating credit quality.

Market Recovery Signals Investor Interest

Despite the sharp decline, strong buying activity emerged after prices hit intraday lows, helping both STRC and SATA recover part of their losses. Cole said dividend reserves remain secure and maintained confidence in the long-term outlook for digital credit products despite ongoing volatility.