Foreign media reported that the "digital credit" market built by Bitcoin Treasury Company around preferred shares recently underwent its first significant stress test. STRC, issued by Strategy, and SATA, issued by Strive, both plunged sharply during trading on June 18. Although they later recovered some losses, the volatility has prompted the market to reassess the stability of such products.
The article's explanation—that the decline is attributed to leveraged liquidations rather than credit deterioration—is not necessarily wrong, but it does not eliminate the underlying risk. For a product originally designed to trade close to par value and attract investors with stable returns, a single-day intraday drop of nearly 20% demonstrates that its trading structure is inherently unstable.
Both products experienced significant volatility on the same day.
On June 18, Strategy’s perpetual preferred stock STRC fell intraday to $82.50, significantly below its par value of approximately $100, before closing at around $88.59. During the same period, Strive’s SATA also declined from near par value into the low $90s, reaching an intraday low of approximately $92.88 before recovering to around $97.71.
Foreign media pointed out that these products were originally marketed as high-yield, relatively stable income securities, performing more like high-yield bonds or preferred shares rather than highly volatile assets. The sharp decline and subsequent rebound of both products on the same trading day indicate that their price behavior does not fully align with the positioning of "stable income instruments."
High yields are tied to Bitcoin holdings
STRC and SATA are both perpetual preferred shares with no fixed maturity date, attracting investors through continuous dividend payments. STRC offers a yield of approximately 11.5%, paid biweekly; SATA has a floating yield of approximately 13% and a higher dividend frequency.
But the key to these products lies not in their dividend structure, but in how the funds are used. Companies issuing these preferred shares all have bitcoin accumulation as their core strategy. In other words, investors are purchasing a security that appears credit-oriented and income-focused, yet its underlying value is tied to the highly volatile bitcoin balance sheet.
Low liquidity amplifies selling pressure
The issuer emphasized that there was no default and that the fundamentals had not deteriorated; the selling pressure primarily stemmed from margin calls and passive selling. Foreign media consider this explanation somewhat reasonable, as both products showed significant rebounds before closing, with price movements inconsistent with a typical credit event.
However, the core concern of the article is that even if this is not a credit issue, the market has already identified another layer of risk: these products have shallow trading volumes and thin liquidity, making their prices vulnerable to rapid deviations from par value when combined with leveraged funds and Bitcoin’s inherent volatility.
On the same day, Bitcoin briefly dropped to around $62,900, with overall market sentiment remaining weak. As the U.S. was approaching a holiday weekend, stock markets would be closed the following day. In this environment, thin liquidity made it easier for selling pressure to intensify. For products that attract capital with narratives of “stable returns,” this structural vulnerability itself constitutes a risk exposure.
Higher coupon rates correspond to higher risk.
Foreign media believe that the significance of this volatility lies not only in the short-term sharp declines of these two securities, but also in the fact that it has allowed the market to first visually witness the cost of so-called "digital credit" products. The higher coupon rate is not unconditional income, but compensation for insufficient liquidity, leverage chains, and Bitcoin price volatility.
If this class of securities continues to expand in the future, investors’ focus may extend beyond dividend frequency and nominal yield to include trading depth, financing structure, reserve arrangements, and whether another chain reaction of selling will be triggered during Bitcoin drawdowns.