Bitcoin treasury firms’ preferred equity instruments endured their worst single trading day on record Thursday, with Strive CEO Matt Cole pointing to forced unwinding of leveraged positions as the primary driver of steep price declines in both SATA and Strategy’s STRC.
Cole: A Leverage Event, Not a Credit Deterioration
Cole posted on X Thursday afternoon calling it the “most difficult day in the history of digital credit,” insisting the selloff reflected a liquidation cascade rather than any weakness in underlying credit quality. “What happened today was a leverage liquidation event, not a deterioration in underlying credit quality,” he wrote.
Cole explained the mechanics: investors attracted to the instruments’ relatively stable yields often amplify exposure using borrowed capital. “Many eventually decide that owning it is not enough. They borrow against it. They lever it,” he wrote. “That works until it doesn’t.”
Prices and Volumes Tell the Story
Both SATA and STRC are structured to trade near a $100 par value. During Thursday’s session, SATA fell as low as $92.88, while STRC plunged to a daily low of $82.53 before partially recovering to close at $88.59. SATA closed the day at $97.71.
Trading volumes were extreme relative to normal activity. Strive Chief Risk Officer Jeff Walton reported that Thursday was SATA’s second-largest trading day on record, with $153 million in volume, and STRC’s fourth-largest, at $941 million. Walton argued those figures, when compared to the far smaller daily volumes seen in established preferred equity instruments such as JPMorgan’s JPM.PD and BlackRock’s PFF, are consistent with a leveraged position unwind rather than fundamental selling.
“Leverage appears to have been flushed, fundamentals intact, and the instruments absorbed the flow and found bids throughout the day,” Walton posted on X.
Questions Around Dividend Payment Linger
Analysts told Decrypt on Thursday that uncertainty over how Strategy intends to meet its dividend obligations is contributing to “continued weakness” in STRC. While it is typical for the instrument to trade below par following its dividend date, the current pressure is being attributed to broader concern about the financial engineering behind these products.
Last month, Strategy sold 32 BTC for $2.5 million after CEO Michael Saylor publicly signaled the possibility, demonstrating the firm could depart from its longstanding “never sell” stance if required to service obligations. Walton said Strive is “aware of a couple anecdotal sources” of SATA leverage concentration and is preparing a postmortem analysis.
Common Equity Also Suffers
Thursday’s damage extended beyond the preferred instruments. Strategy’s common shares (MSTR) fell a further 3.46% to close at $112.53, extending the stock’s monthly decline to more than 32%. Shares in Strive (ASST) dropped 3.8% to $14.85, pushing its monthly losses to nearly 6%.
U.S. markets were closed Friday for the Juneteenth federal holiday. A representative for Strive did not respond to Decrypt’s request for comment before publication.
