Leverage Unwind Triggers Worst Day for Crypto Credit: STRC Falls to $82

The crypto credit market recorded its worst single day on Thursday as a margin call cascade forced STRC and SATA well below par, with both assets recovering sharply by the close. Strive Asset Management CEO Matt Cole confirmed the selloff was driven by forced selling, not by any deterioration in the underlying credit quality of the issuers.

What happened today was a leverage liquidation event, not a deterioration in underlying credit quality.

Cole said investors who had borrowed against digital credit assets to amplify yields faced margin calls when prices fell, triggering a cascade of selling. He drew a direct parallel to classic hedge fund blowups where overleveraged positions in safe assets collapsed after funding conditions tightened.

The road to hell is paved with carry.

STRC fell as low as $82.50, a 17.5% discount to its $100 par value, before recovering to near par in late trading. SATA dropped from $100 into the low $90s and also bounced back. Despite the volatility, Cole said Strive’s dividend reserves remain intact and the firm is not under financial stress. The underlying credit profile of issuers is substantially unchanged from before the selloff.

Cole noted significant buying interest at the intraday lows, calling the demand an encouraging sign for the asset class. It suggests investors see the episode as a liquidity event rather than a fundamental problem with the credits themselves.

Separately, insider selling at Strategy, the company that holds the largest corporate Bitcoin treasury, continued. One director recently sold 1,500 MSTR shares, booking a $9 million profit, according to filings. MicroStrategy (MSTR) carries an Alpha Score of 22 out of 100, labeled Weak.

Cole framed Thursday's event as a necessary growing pain for digital credit. "A liquidation event and a credit event are not the same thing," he said, adding that his long-term conviction in the asset class remains unchanged.