Strive Frames Digital Credit Selloff as Liquidation Event, Not Credit Breakdown

Digital credit products linked to Strategy’s bitcoin-backed ecosystem sold off sharply last week before staging partial recoveries, according to Strive. Strive Chief Risk Officer Jeff Walton said Strategy’s preferred stock funding vehicle STRC fell as low as $82.53 on Thursday before rebounding to roughly $90.50, while Strive’s SATA dropped into the low $90 range before recovering to about $98.59.

The distinction matters because Strive is arguing the move reflected market structure stress rather than a failure of the underlying credit. Walton attributed the declines to leverage liquidations and heavy selling pressure, saying the episode did not appear to originate in DeFi protocols. Strive CEO Matt Cole had previously described the volatility as a leverage liquidation event, not a credit failure.

Walton said unusually large volumes accompanied the selloff. STRC traded roughly $950 million on Thursday, while SATA traded about $150 million, according to Walton. He contrasted those figures with BlackRock’s preferred securities ETF, PFF, which he said traded about $77 million in volume.

Strive framed that liquidity as an important test for digital credit markets. Walton said deep liquidity is needed to attract institutional investors and support broader adoption, even as volatility exposes growing pains in a young asset class. He also said investors appeared to rotate between SATA and STRC as yields converged.

Strive continues to argue that the products are credit instruments rather than stablecoins. Walton said Strategy’s balance sheet is healthier than during the 2022 bitcoin bear market, citing roughly 10% leverage now compared with about 130% leverage during the prior cycle. He expects market participants to better understand the instruments over time and said prices could gravitate back toward their $100 target levels.