Since November last year, leverage funds on the shares of Strategy, formerly known as MicroStrategy, underwent significant losses.
Strategy's Transformation
Strategy, originally known as MicroStrategy, shifted its focus from business analytics to a cryptocurrency hedge fund, beginning the acquisition of Bitcoin in 2020 under founder Michael Saylor.
Role of Leverage ETF in Decline
Leverage funds like the T-REX 2X Long MSTR Daily Target ETF (MSTU) lost over 40% of their value in recent trading sessions. These funds are subject to significant shifts due to the need for daily rebalancing to maintain the leverage target.
Future Prospects for ETFs
In September, two new leverage ETFs targeting MSTR shares were launched, focusing on double leverage long and short exposure. These funds might face challenges in highly volatile market conditions, demanding caution from investors.
Leverage funds on Strategy shares have experienced significant declines since November, reflecting risk exposure to active strategies in highly volatile market environments.
