Latest developments: Digital credit products tied to Strategy’s bitcoin-backed ecosystem suffered steep declines last week before partially recovering.
Strategy’s preferred stock funding vehicle STRC fell as low as $82.53 on Thursday before rebounding to roughly $90.50, according to Strive Chief Risk Officer Jeff Walton.Strive’s SATA dropped into the low $90 range before recovering to about $98.59.Walton attributed the move to leverage liquidations and heavy selling pressure rather than deterioration in the underlying credit quality.CEO Matt Cole previously described the episode as a “leverage liquidation event, not a credit failure.”CoinDesk’s Jennifer Sanasie interviewed Strive Chief Risk Officer, Jeff Walton on Public Keys.
What happened: Strive’s analysis points to forced selling rather than a breakdown in decentralized finance 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 across both securities.Walton characterized the volatility as part of the maturation process for a new asset class.
The liquidity story: Strive argues the market’s ability to absorb large trading volumes is a positive signal.
GIPHY App Key not set. Please check settings