Strive CEO Attributes Digital Credit Market Selloff to Leverage Liquidations

The digital credit market experienced a sharp selloff on June 19, 2026, characterized by Strive Asset Management CEO Matt Cole as a "leverage liquidation event." During this incident, Strive's preferred equity, STRC, fell to $82.50 before recovering to $89, while its SATA asset briefly dipped below its typical par value of $93, ultimately returning to $97.

Cole explained that the drop stemmed from margin calls on leveraged investors, causing forced selling that influenced prices independent of the actual credit quality of issuers. He emphasized that these declines should not be misconstrued as weakening fundamentals in the digital credit market. In his assessment of the event, he said, "What happened today was a leverage liquidation event, not a deterioration in underlying credit quality," reinforcing his long-term confidence in digital credit despite the upheaval.

According to Cole, the situation mirrors previous hedge fund blow-ups related to leveraged positions in U.S. Treasury securities, which maintained their credit strength during periods of market stress. He noted, "There is an old saying in income markets that the road to hell is paved with carry," highlighting the risks associated with using leverage to increase returns.

Despite the turbulence, Cole pointed to evidence of buyer interest, stating, "Both STRC and SATA experienced significant buying interest off their intraday lows." This demand suggests that investors are still keen on digital credit assets, countering fears of a more substantial decline in the market's health. Cole reassured stakeholders, saying, "Our dividend reserves remain intact. Our company is not under stress," while affirming the firm's credit profile remains largely unchanged.

As the digital credit market strives to stabilize following this liquidation episode, market observers should watch for signs of sustained buying interest and the overall recovery trajectory of STRC and SATA. Understanding the distinctions between liquidation events and credit events will be critical as the market navigates these challenges.