Strave CEO Matt Cole states that Thursday's sharp fall of SATA and Strategy's STRC was largely triggered by the passive silo of the leverage position rather than by the deterioration of the bottom credit quality. Both products were originally traded around $100 in nominal terms, but at the time of receipt they were reduced to $9.771 and 88.59 respectively.
Sold for magnification and drop face value
Cole said on X that this was “the hardest day in the history of digital credit products”. He indicated that such products were easily held by investors when there was a high rate of return and a relatively limited volatility, and that, once the situation reversed, the leverage quickly magnified the decline.
On that day, the transactions between SATA and STRC amounted to $153 million and $941 million, respectively, and were at historical heights. According to market figures, the fall was more like a passive withdrawal of funds than a sudden deterioration of basics.
There's a rebound after the low point on the plate.
Strive related person Walton also said on X that the leverage in the market seems to have been concentrated, but the product base is still intact. He claims that the two tools were continuously purchased and the price subsequently recovered from the low.
According to Cole ' s disclosure, the SRC disk fell at one point to US$ 82.50, followed by a clear rebound, while the SATA fell from a near face value to US$ 90 and recovered. Walton also mentioned that these two products were less liquid on a day-to-day basis and therefore more volatile when deleveraging than the larger-scale priority securities such as JPM.PD and Belet PFF.
The split arrangement still suppresses STRC
Despite the leverage factor, the continued vulnerability of the STRC in the near future is also linked to uncertainty about the way in which dividends are paid. Decrypt quotes analysts who argue that it is not unusual for STRC to trade below nominal value after interest-cutting, but that the market is now more concerned about how Strategy will meet the dividends obligation.
Both SATA and STRC are designed to help issuers to raise more funds to continue to increase their holdings of bitcoin. Such products attempt to provide investors with dividends and relatively low volatility, as compared to holding ordinary shares or bitcoin per se.
Additional information:It was reported that Strategy had sold 32 bitcoins last month, with an estimated $2.5 million. On this basis, the market concluded that the company did not completely rule out the sale of bitcoin when it met the demand for funds or dividends.