A new introduction to Bitcoin exposure
The SEC has approved MSTX, the first leveraged single-share ETF targeting microstrategy, a company known for its significant Bitcoin holdings. This approval is a key moment for traditional and crypto markets, as MSTX boosts MicroStrategy's daily stock movement by 175%, making it a more powerful way for investors to gain exposure to Bitcoin through MicroStrategy's large holdings.
SEC approves MSTX ETF
The US Securities and Exchange Commission (SEC) has given the green light to MSTX, a leveraged ETF issued by Defiance ETFs. Unlike traditional ETFs, MSTX offers investors a chance to gain 175% of MicroStrategy's daily stock movements.
MicroStrategy, under the leadership of founder Michael Saylor, has become one of the largest corporate holders of Bitcoin, with approximately 226,500 BTC on its balance sheet as of Q2 2024.
The company's debt-to-BTC strategy already makes the stock a valuable play on Bitcoin.
A unique opportunity with a high risk factor
Meanwhile, Defiance ETFs CEO Sylvia Jablonski highlighted the ETF's potential for those looking to maximize their exposure to Bitcoin. She noted that MicroStrategy's stock has a higher beta compared to Bitcoin, making MSTX an ideal choice for investors to leverage their exposure to the cryptocurrency market through an ETF.
However, the fund carries a high management fee of 1.29%, reflecting the high risk and high reward nature of this investment.
Impact on the Crypto market
MSTX's approval comes as the SEC recently began allowing leveraged single-stock ETFs after years of rejection. While other leveraged funds that focus on Tesla and Apple remain small, MSTX aims to stand out through its micro-strategy holdings that link to the Bitcoin market.
Eric Balchunas, senior ETF analyst at Bloomberg, opined that MSTX may be “the most volatile ETF in the US market.” This volatility can attract risk-averse investors or deter those wary of potential downsides.
The success of MSTX will depend on investor interest and how the microstrategy works as a Bitcoin proxy.
