STRC slid to $82.50 during a sharp sell-off that hit the digital credit market, and attention quickly shifted to leverage and forced liquidations. In a post on X, Strive Asset Management’s Matt Cole called it one of the most challenging days in digital credit history, while arguing that the move did not reflect a deterioration in underlying credit indicators. His view was that margin calls and compulsory selling created the drop and then accelerated it.
Leverage pushed prices away from the $100 structure
According to Cole, both STRC and SATA are structured to trade near their $100 face value under normal conditions. He said the sector’s elevated yields had encouraged investors to add leverage, and once prices started falling, margin pressure forced more sales into a weak tape. That sequence turned a decline into a liquidation cascade, separating market prices from what he described as the issuers’ repayment capacity.
His argument was direct. The sell-off was not a sign of weakening core credit quality, but a leverage-driven event where positioning and market mechanics mattered more than credit fundamentals.
Cole draws a line between liquidation stress and credit deterioration
Cole compared the episode to earlier collapses involving US hedge funds that carried leveraged Treasury positions. The comparison was meant to show that violent price action, even in highly stressed conditions, does not automatically mean the securities involved have become less creditworthy. In his view, market turmoil and a true credit event should not be treated as the same thing.
He also said dividend reserves have been maintained and that the company is not under stress. Cole added that there has been little change in the firm’s core credit profile, and he pointed to the rebound after the sell-off as a sign that demand had not disappeared.
Buyers returned after the intraday low
The recovery from the session low suggested that buyers stepped in once prices fell sharply. Cole said both STRC and SATA attracted notable buying interest after hitting their intraday troughs, indicating that demand for digital credit assets was still present despite the intensity of the volatility.
After the swings, the market’s focus moved to leverage levels in similar products and the risk of additional margin calls. Analysis cited in the report said the recent decline so far appears tied more to market structure and positioning than to any material shift in underlying credit fundamentals.