Matt Cole states that forced selling by leveraged investors led to significant drops in STRC and SATA, both of which later recovered.
By James Van Straten|Edited by Jamie Crawley Jun 19, 2026, 9:19 a.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on SummaryShow- Matt Cole indicated that the downturn resulted from a "leverage liquidation event" caused by margin calls and forced selling, rather than a decline in the issuers' credit quality.
- Both STRC and SATA recovered from their lowest points of the day, with Cole citing strong buying interest as a sign of ongoing demand for digital credit assets.
- Cole likened the situation to historical hedge fund failures related to leveraged U.S. Treasury holdings, emphasizing that Treasury securities maintained their credit strength despite market pressures.
The digital credit market experienced one of its most severe selloffs on Thursday, with Strive Asset Management's CEO, Matt Cole, characterizing the incident as a liquidation driven by leverage rather than an indication of weakening credit fundamentals.
Cole noted it was "the most difficult day in the history of Digital Credit," in a post on X, as STRC plummeted to $82.50 before recovering to $89, while SATA fell below $93 from its par value before bouncing back to $97. Both products are intended to trade near their $100 par value.
"What transpired today was a leverage liquidation event, not a decline in the underlying credit quality," Cole stated.
According to Cole, investors drawn to the sector's attractive yields (both products yield over double digits) increasingly utilized leverage to boost returns. As prices began to drop, margin calls led to forced selling, triggering a self-reinforcing decline that was disconnected from the true creditworthiness of the issuers.
"There is an old saying in income markets that the road to hell is paved with carry," he remarked.
Cole drew parallels between this event and past hedge fund collapses involving leveraged U.S. Treasury positions, noting that Treasury securities themselves remained robust credits even during stressful market conditions.
"Our dividend reserves remain intact. Our company is not under stress," Cole added, asserting that the firm's credit profile largely remains unchanged.
The swift recovery from the day’s lows indicates that buyers were active as prices fell. "Both STRC and SATA saw significant buying interest off their intraday lows," Cole observed.
"A liquidation event is not synonymous with a credit event," he emphasized, maintaining his long-term confidence in digital credit despite the recent market volatility.