Defiance Investments on Thursday unveiled its fresh long-leveraged MicroStrategy ETF (MSTX) following approval by the Securities and Exchange Commission (SEC) on Wednesday. The investment product aims to attract investors seeking long-term exposure to the largest cryptocurrency by market capitalization, Bitcoin (BTC).
MSTX offers leveraged exposure to Bitcoin
Rebellion revealed the first “long leveraged single stock ETF for MicroStrategy,” the largest corporate Bitcoin holder. The product aims to provide 1.75x (175%) daily exposure to the company’s stock, MSTR.
Sylvia Jablonski, CEO of Defiance, stated that the single-stock ETF aims to provide leverage exposure to “disruptive companies” without the need for a margin account. She further stated that their product will offer a “unique opportunity” for those looking to maximize their leverage exposure to a flagship cryptocurrency, but with an “ETF wrapper.”
With the introduction of MSTX, our long-term MicroStrategy ETF, we are expanding the potential for investors seeking long-term exposure to Bitcoin. Given MicroStrategy’s higher beta compared to Bitcoin, MSTX offers investors a unique opportunity to maximize exposure to the Bitcoin market within an ETF wrapper.
According to the announcement, MicroStrategy’s “visionary approach to data analytics and business intelligence” has made the company a prominent player in the Bitcoin market. What’s more, the company’s BTC strategy, valued at over $15 billion, “has caught the attention of investors seeking leveraged exposure to Bitcoin.”
Michael Saylor, co-founder and CEO of MicroStrategy, recently illuminated MSTR’s performance since Bitcoin was adopted as the Treasury’s primary reserve asset in 2020. Since then, “$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
The Most Volatile ETF in the US
Defiance warns that its fund is not suitable for all investors. The ETF issuer explained that MSTX is not intended for investors who do not actively monitor and manage their portfolios because it is riskier than non-leveraged alternatives.
The Fund is intended for apply only by sophisticated investors, such as traders and busy investors using animated strategies. Investors who do not understand the Funds or do not intend to actively manage and monitor their funds should not purchase shares of the Funds.
Ahead of the launch, ETF analyst Eric Balchunas weighed in on the approval and launch of MSTX. On August 14, Bloomberg expert revealed that the investment product will be “the most volatile ETF you can get on the US market”, despite having “only” 1.75x.
Balchunas also noted that despite being the most volatile U.S. ETF, MSTX “falls short of Europe’s $3LMI LN, which is 3x Microstrategy’s, its 90-day volatility is over 350%, making $TQQQ look like a money market fund.”
Nevertheless, the analyst believes the launch is a “big step in the hot sauce arms race” and suggested that Defiance “probably tried twice, but the SEC backed down.” Ultimately, he called the launch a “heat wave,” explaining that MSTX is expected to top the U.S. most volatile ETF list on its first day.
MSTX estimated to top the Most Volatile ETFs in the US list. Source: Eric Balchunas on X
Featured image from Unsplash.com, chart from TradingView.com
