- Fund Asset Growth
- MicroStrategy and Bitcoin History
- Launch of New ETFs
This week, leveraged MicroStrategy (MSTR) exchange-traded funds (ETFs) reached $400 million in net assets as retail investors continue to flock to the ultra-volatile Bitcoin plays, according to data from Bloomberg Intelligence.
Fund Asset Growth
Asset manager Defiance ETFs launched the first leveraged MSTR ETF in August. Competitors REX Shares and Tuttle Capital Management introduced even more leveraged offerings in September, initiating what Bloomberg ETF analyst Eric Balchunas has dubbed the 'hot sauce arms race.' The funds drew inflows of more than $70 million in the first week of trading, Balchunas noted in a post on the X platform.
MicroStrategy and Bitcoin History
Originally a business intelligence firm, MicroStrategy transformed into a de facto cryptocurrency hedge fund in 2020 when founder Michael Saylor started using the company’s balance sheet to buy Bitcoin. On August 1, MicroStrategy adopted a new lodestar for corporate performance called 'Bitcoin Yield,' a measure of BTC-per-share. The company also announced plans to issue $700 million in debt, partly to buy more Bitcoin.
Launch of New ETFs
On August 15, Defiance ETFs launched the Defiance Daily Target 1.75X Long MSTR ETF (MSTX), which 'seeks to provide 175% long daily targeted exposure to' MSTR’s performance. On September 18, asset managers REX Shares and Tuttle Capital jointly launched two new ETFs: T-REX 2X Long MSTR Daily Target ETF (MSTU) and T-REX 2X Inverse MSTR Daily Target ETF (MSTZ), designed to add even more leverage to MSTR’s performance. Balchunas commented that this 'shows just how much 'need for speed' there is out there.' Leveraged ETFs add additional risk to MSTR and tend to underperform due to the costs of daily rebalances to maintain a leverage target.
Leveraged MicroStrategy ETFs continue to attract significant interest from investors, indicating a growing appetite for Bitcoin volatility plays and the associated risks.
