MicroStrategy’s Leveraged ETFs Surge Past $400 Million
MicroStrategy's leveraged ETFs have exceeded $400 million in net assets, attracting retail investors eager to capitalize on Bitcoin's volatility.
Following the launch of a leveraged MSTR ETF by Defiance ETFs in August, competitors REX Shares and Tuttle Capital Management introduced their own turbocharged versions in September, a trend described by Bloomberg ETF analyst Eric Balchunas as a “hot sauce arms race.”
Originally a business intelligence firm, MicroStrategy pivoted to a cryptocurrency hedge fund in 2020 under founder Michael Saylor, who initiated the leveraged ETFs to enhance the company’s Bitcoin purchases. The focus now has shifted towards generating Bitcoin yield, aiming to increase the amount of Bitcoin held per share for investors.
On September 16, MicroStrategy announced a $700 million debt offering partly aimed at acquiring more Bitcoin. Analyst Mark Palmer from Benchmark even suggested that the company might begin lending Bitcoin to generate additional yield.
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The growing interest in MicroStrategy as a Bitcoin proxy is reflected in the recent launch of new ETFs that offer leveraged exposure. The Defiance Daily Target 1.75X Long MSTR ETF debuted on August 15, while REX Shares and Tuttle Capital Management followed with their T-REX 2X Long MSTR Daily Target ETF and T-REX 2X Inverse MSTR Daily Target ETF on September 18. In their first week, these leveraged ETFs attracted over $70 million, indicating a strong demand for high-risk, high-reward investments.
Leveraged ETFs aim to amplify returns from an underlying benchmark, such as the S&P 500, using debt or financial derivatives to achieve returns that are typically 2x or 3x the daily performance. While this strategy can yield substantial short-term gains, it also increases the potential for significant losses, making leveraged investments particularly risky for long-term holders.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
