Defiance launches 1.75x Leveraged MicroStrategy ETF

In the year On August 15, exchange-traded fund provider Defiance ETFs announced the launch of MSTX, MicroStrategy's first-ever single-stock ETF. This development follows approval from the US Securities and Exchange Commission (SEC).

Designed to provide 175% long daily exposure to microstrategy stocks, MSTX offers investors broad access to company performance, closely tied to Bitcoin volatility.

Microstrategy Bitcoin strategy drives ETF demand

MicroStrategy is a Virginia-based software company known for its robust Bitcoin acquisition strategy. As of Q2 2024, the company holds 226,500 BTC, making it the largest public company owner of Bitcoins. The company's stock has become a proxy for bitcoin, attracting investors seeking high exposure to the digital asset without directly holding it.

MSTX targets sophisticated investors who actively manage their portfolios. Microstrategy stocks highlight the daily performance and provide the opportunity to earn high profits.

“With MicroStrategy's inherent high beta compared to Bitcoin, MSTX offers investors a unique opportunity to maximize their leverage within an ETF portfolio,” said Sylvia Jablonski, CEO of Defiance ETFs.

Read more: Who will have the most Bitcoins in 2024?

A rich ETF like MSTX is a multiple of the underlying asset's daily returns. For example, if MicroStrategy's stock goes up 5% in a day, the 1.75x leveraged ETF would yield an increase of 8.75%.

However, recalculation is done daily. Such a method means that the returns can vary over time due to compounding effects. Additionally, this daily reset may lead to performance that differs from what investors might expect over time.

Therefore, Defiance MSTX emphasizes that it is best suited for experienced investors who understand these risks well and are prepared to closely monitor their investments.

Market analysts have received MSTX cautiously, acknowledging the potential demand it brings to the market. Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, said MSTX is one of the most volatile ETFs on the market, with performance metrics 13 times higher than the S&P 500 ETF ( SPY ).

He also pointed out that Tuttle and Rex Financial (T-Rex) are planning to launch a similar ETF called Defiance Tuttle to market to market. In early June, T-Rex filed for the T-Rex 2X Long MSTR Daily Target ETF with the SEC. This fund seeks to double the daily performance of the micro strategy.

MicroStrategy Stock Company has shown impressive growth since it started buying Bitcoin regularly in August 2020. Initially trading around $14, MSTR quickly rose above $100 in February 2021, a 605% gain in six months.

Read more: 5 Best Web3 Stocks to Invest in 2024

As of 20:00 ET in afternoon trading, MSTR was trading at $131.93. This figure represents an increase of 1.2 percent in the last 24 hours and a year-on-year increase of 92.49 percent.