Latest developments: Digital credit products linked to Strategy’s Bitcoin-backed ecosystem suffered sharp declines last week before partially recovering.
- Strategy’s preferred stock financing vehicle, STRC, fell as low as $82.53 on Thursday before rebounding to around $90.50, according to Jeff Walton, Strive’s chief risk officer.
- Strive’s SATA fell to the low $90 range before recovering to around $98.59.
- Walton attributed the move to leveraged liquidations and heavy selling pressure rather than deterioration in underlying credit quality.
- CEO Matt Cole previously described the episode as a “leveraged liquidation event, not a credit failure.”
- CoinDesk’s Jennifer Sanasie interviewed Strive Chief Risk Officer Jeff Walton about public keys.
What happened: Strive’s analysis points to forced sales rather than a collapse of decentralized financial markets.
- Walton said trading data suggests holders sold the instruments, triggering liquidations elsewhere in traditional financial markets.
- He said the event did not appear to originate from DeFi protocols.
- The selloff occurred amid unusually large trading volumes in both stocks.
- Walton characterized volatility as part of the maturation process of a new asset class.
The story of liquidity: Strive believes that the market’s ability to absorb large trading volumes is a positive signal.
