Leveraged Bitcoin Treasuries Buckle as Digital-Credit Securities Sell Off

The instruments sold to retail investors as a safer way to gain Bitcoin exposure fell sharply on Friday. Strategy's preferred income security STRC and the related SATA dropped before both recovered part of the loss. Matt Cole, chief executive of the asset manager Strive, attributed the decline to forced selling by leveraged investors rather than to any change in the underlying companies.

The episode matters because of what supports these securities. Bitcoin Magazine counts roughly $15 billion across three securities marketed to Bitcoin holders as a smarter way to hold the asset, with about $8.8 billion of STRC alone held by retail investors. The treasury model depends on issuing debt and preferred shares to buy Bitcoin, and that funding works only while the instruments trade near par and dividends appear covered. When they trade below par, raising new money becomes harder.

The strain extends to the miners who secure the network. CoinDesk reports that Bitcoin has traded below the average cost of mining for five months, that about 20% of miners are now unprofitable, and that publicly traded miners sold more than 32,000 Bitcoin in the first quarter to cover operating costs, more than they sold in all of 2025. Bitcoin traded near $62,000 as the week's earlier gains reversed.

From a sound-money perspective, the lesson concerns counterparty risk rather than price. Holders who sought higher income bought corporate credit whose value depends on a single issuer's balance sheet and on continued access to capital markets, not on holding the asset directly. The selloff tests whether borrowing against a volatile reserve asset can withstand a period when prices fall and refinancing costs rise.