On Thursday, Defiance Investments unveiled its new long-leveraged MicroStrategy ETF (MSTX) following Wednesday’s approval by the Securities and Exchange Commission (SEC). The investment product is intended to appeal to investors seeking long-leveraged exposure to the largest cryptocurrency by market cap, Bitcoin (BTC).
MSTX Offers Leveraged Exposure to Bitcoin
defiance revealed the first “single-stock long leveraged ETF for MicroStrategy”, the largest corporate holder of Bitcoin. The product aims to provide 1.75x (175%) long daily targeted exposure to the company’s stock, MSTR.
Defiance CEO Sylvia Jablonski stated that the single-stock ETF aims to provide leveraged exposure to “disruptive companies” without the need for a margin account. She further asserted that their product will provide a “unique opportunity” for those looking to maximize their leveraged exposure to the flagship cryptocurrency, but with “an ETF wrapper.”
As we introduce MSTX, our long leverage MicroStrategy ETF, we are increasing the potential for investors seeking long leveraged exposure to Bitcoin. Given MicroStrategy’s inherently higher beta compared to Bitcoin, MSTX presents a unique opportunity for investors to maximize their leveraged exposure to the Bitcoin market within an ETF wrapper.
According to the announcement, from MicroStrategy “visionary approach to data analytics and business intelligence” has seen the company emerge as a prominent player in the Bitcoin market. Additionally, the company’s BTC strategy, valued at over $15 billion, has “attracted the attention of investors seeking leveraged exposure to Bitcoin.”
Michael Saylor, co-founder and chairman of MicroStrategy, recently marked MSTR’s performance since adopting Bitcoin as its primary Treasury reserve asset in 2020. Since then, “$MSTR has outperformed 499 of the 500 stocks in the S&P 500.”
Bitcoin (BTC) is trading at $59,477 in the weekly chart. Source: BTCUSDT on TradingView
Most Volatile ETF in the US
Defiance warned that its fund is not suitable for all investors. ETF The issuer has clarified that MSTX is not intended for investors who do not actively monitor and manage their portfolios, as it is riskier than non-leveraged alternatives.
The Fund is designed to be used only by experienced investors, such as traders and active investors who employ dynamic strategies. Investors who do not understand the Funds or do not intend to actively manage their funds and monitor their investments should not purchase shares in the Funds.
Ahead of the launch, ETF analyst Eric Balchunas weighed in on the approval and launch of MSTX. On August 14, the Bloomberg expert said revealed that the investment product would be the “most volatile ETF you can get in the US market,” despite being “only” 1.75x.
Balchunas also pointed out that despite being the most volatile ETF in the US, MSTX “can’t match $3LMI LN in Europe, which is 3x Microstrategy, the 90D volatility is over 350% and makes $TQQQ look like a money market fund.”
Nevertheless, the analyst believes that the launch a “big step in the hot sauce arms race” and suggested that Defiance likely “tried twice, but the SEC blocked it.” Ultimately, he called the launch a “heat wave” and explained that MSTX is expected to take the top spot on the U.S. list of most volatile ETFs on day one.
MSTX estimated to top the Most Volatile ETFs in the US list. Source: Eric Balchunas on X
Main image from Unsplash.com, chart from TradingView.com