Strive CEO: The significant fluctuations in STRC and SATA today are due to leverage liquidations, not underlying credit deterioration

BlockBeats News, June 19 — Strive CEO Matt Cole stated that today was the most difficult day in the history of digital credit. STRC rebounded sharply after falling to a low of $82.50 during trading, while SATA dropped from near par value to around $90 before recovering. Many investors experienced a tough trading day.

Matt Cole said that what happened today was a leverage liquidation event, not a deterioration of the underlying credit quality. He pointed out that when investors find an asset class with higher yields, relatively low volatility, and strong underlying credit features, they often increase returns through borrowing and leverage. However, if the market moves in the opposite direction, forced selling can trigger a cycle of falling prices, margin calls, and further selling, causing the sell-off to detach from fundamentals and be driven by balance sheet constraints.

He emphasized that the issuer’s credit quality remains sound. Strive’s dividend reserve remains intact, the company is not under pressure, and still has the capacity to fulfill obligations and continue executing its strategy. He also stated that both STRC and SATA showed significant buying interest near their intraday lows and quickly recovered, indicating actual demand at lower price levels.

Matt Cole said that liquidation events are not the same as credit events. Today’s price fluctuations did not change his confidence in the long-term opportunities of digital credit; instead, they reinforced his view that the field is building a new category of financial instruments and will go through growing pains similar to those experienced before the maturity of large fixed income markets.