Digital Credit Market Plunges Amid Leverage-Driven Selloff

The digital credit market experienced a historic selloff on Thursday as leveraged investors rushed to unwind positions tied to high-yield crypto-linked credit products. STRC, a preferred equity product, dropped to nearly $82.50 during intraday trading before rebounding toward $89.

SATA, another security offered by Strive Asset Management, slid below $93 before recovering close to $97. Both securities are structured to remain near their $100 par value, making the sudden decline unusual even during periods of elevated crypto volatility.

Matt Cole, CEO of Strive Asset Management, attributed the selloff primarily to leverage exposure rather than weakening balance sheets or rising default concerns among issuers. He noted that investors increasingly used borrowed capital to amplify returns generated by digital credit instruments offering double-digit yields.