GraniteShares, a rapidly growing asset manager from New York with $10 billion in assets, has taken a step forward in the ETF world by filing an application for the release of new crypto-related funds.
GraniteShares' Plans in the ETF Sphere
On December 20, GraniteShares filed for the creation of several new leveraged ETFs tracking stocks like Riot Platforms, Marathon Digital, MicroStrategy, and Robinhood. These ETFs propose 2x long and 2x short positions where, for example, GraniteShares 2x Long RIOT ETF might rise by 2% if Riot's stock increases by 1%. Marathon Digital and Riot Platforms are among the largest bitcoin holders, following MicroStrategy, which possesses over 439,000 coins. Robinhood serves as a major platform for crypto and stock investments.
Popularity and Trends of the First Months
In 2024, leveraged ETFs gained popularity due to their ability to generate significant returns amid rising crypto and stock markets. The T-Rex 2x Long MSTR Daily Target fund and the Defiance Daily Target 2X Long MSTR ETF attracted approximately $1.8 billion in assets under management, showcasing a value growth of 308% and 253% respectively over the last three months—significantly higher than MicroStrategy's stock growth.
Risks and Other Types of ETFs
However, such ETFs face the risk of declines in a bear market. MicroStrategy's stock dropped 24% in the last month, while MSTU and MSTX fell by over 50%. Historically, similar ETFs like ProShares UltraPro QQQ ETF showed similar behavior, dropping by 79% in 2022. Besides leveraged funds, YieldMax has introduced new crypto-focused ETFs using covered call strategies for monthly income.
GraniteShares' new applications for crypto-related ETFs highlight the increasing demand for such instruments, despite possible risks when using them in unpredictable market conditions.