Matt Cole, Chairman and CEO of Strive, said Thursday's sharp intraday drop in Strategy's STRC and Strive's SATA was the result of a liquidation of leveraged positions rather than a deterioration in issuer fundamentals.
"Today was the most difficult day in the history of Digital Credit," Cole wrote on X Thursday evening. "What happened today was a leverage liquidation event, not a deterioration in underlying credit quality."
STRC and SATA, two high-yield perpetual preferred stocks designed to trade near a $100 par value, fell to significant lows on Thursday before partially recovering. STRC fell to a record low of $82.53, while SATA dropped to $92.90. The former closed the day at $88.59, while the latter closed at $97.71.
On Thursday, trading volume for both perpetual preferred stocks surged well above their averages. STRC saw $10.6 million in volume, significantly exceeding its average of $3.6 million, while SATA recorded $1.57 million, far surpassing its typical daily average of $386,698.
The Strive CEO explained that investors borrow against these high-yield, low-volatility digital credit instruments to maximize returns.
