Leveraged MicroStrategy ETF 400m
Sponsored micro-strategy (MSRR) exchange-traded funds (ETFs) broke $400 million in net worth this week as retail investors continued to pour into highly volatile bitcoin (BTC) plays, according to data from Bloomberg Intelligence.
Asset manager Defiance ETFs launched its first leveraged MSTR ETF in August. Competitors REX Shares and Tuttle Capital Management offered a more leveraged offering in September, setting up what Bloomberg ETF analyst Eric Balchunas called a “hot South arms race.”
Originally a business intelligence firm, MicroStrategy morphed into a de facto cryptocurrency hedge fund in 2020 when founder Michael Saylor started using the company's balance sheet.
Together, MSTR and MSTU break $400m in net assets. Source: X
Related: Bitcoin Bulls Should Avoid Microstrategy's Newly Used ETF
In the year On August 1, Microstrategy adopted a new lodestar for corporate performance: “Bitcoin Yield”, a measure of BTC-per-share. MSTR aims to use its balance sheet to cheaply fund additional Bitcoin purchases that will benefit MSTR shareholders.
On September 16, MicroStrategy announced plans to issue $700 million in debt, in part to buy more BTC. Mark Palmer, an analyst at Benchmark Equity, told Cointelegraph on September 24 that it may begin lending to produce some of its bitcoin holdings.
On August 15, Defiance ETFs launched the Defiance Daily Target 1.75X Long MSTR ETF (MSTX). It seeks to deliver 175% long daily target exposure for MSTR's performance, Defian said.
On September 18, asset managers REX Shares and Tuttle Capital Managed jointly launched two ETFs designed to add leverage to MSTR's performance.
The ETFs — T-REX 2X Long MSTR Daily Target ETF ( MSTU ) and T-REX 2X Inverse MSTR Daily Target ETF ( MSTZ ) — aim for dual leveraged long and short exposure to MSTR, REX and Tuttle, respectively.
MicroStrategy uses Bitcoin Yield as a lodestar for performance. Source: Microstrategy
They closed more than $70 million in revenue in the first week of trading, Balchunas said in a post on the X Forum on September 27.
“I didn't think there would be room for both (he quickly) [shows] How much ‘need for speed' is there. What a country,” said Balchunas.
Leveraged ETFs add additional risk to MSTR and attempt to minimize the costs of daily returns in order to maintain a target return. They also typically hold financial derivatives rather than the underlying stock.
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