Matt Cole, CEO of asset manager Strive, called July 24 the worst day in digital credit history. Strategy's perpetual preferred stock STRC plunged to $82.50 intraday, far below its $100 par value, while Strive's own SATA slid to around $90 before attracting buying. Cole rushed to calm markets, framing the sell-off as a leverage liquidation event, not a credit deterioration.
Leverage Liquidation: Portfolios Forced to Unwind, Not Assets Going Bad
Cole broke down the chain reaction: investors borrowed to amplify returns on high-yield preferreds. When the market turned, margin calls forced selling, which pushed prices lower and triggered more forced exits—a self-reinforcing cycle. He stressed that this selling was balance-sheet driven, unrelated to the credit quality of the issuers. “A liquidation event is not the same as a credit event,” he said, adding that Strive's dividend reserves are full and the company has no payment pressure.
Buyers Step In at Lows, Prices Recover
Both STRC and SATA saw significant buying interest near their intraday lows, leading to a quick price recovery. Cole viewed this as evidence of real demand at depressed levels. He said the day's volatility has not shaken his conviction in digital credit's long-term potential; rather, it reinforced his view that the asset class is going through growing pains typical of maturing fixed-income markets.
Higher-Yield Rival Draws Capital Away, Blue Chip Takes Hit
STRC has been under pressure partly because capital is rotating into a higher-yield competitor: SATA, which since June 16 has become the first U.S. security to pay cash dividends every business day, offering an annualized yield of roughly 13%. The combination of fund migration and leverage unwinds hit the incumbent hardest. Cole's message aimed to separate the 'rate-chasing + liquidation' dynamic from any underlying credit weakness.