Anika Begay
On Thursday, Defiance Investments unveiled its new MicroStrategy Leveraged Long ETF (MSTX) following approval from the Securities and Exchange Commission (SEC) on Wednesday. The investment product aims to attract investors seeking leveraged long exposure to the largest cryptocurrency by market cap, Bitcoin (BTC).
MSTX to Offer Leveraged Exposure to Bitcoin
Defiance has unveiled the first “Single-Stock Long Leveraged ETF for MicroStrategy,” the largest corporate holder of Bitcoin. The product aims to provide a targeted daily long exposure of 1.75x (175%) to the company’s shares, MSTR.
Defiance CEO Sylvia Jablonski said the single-stock ETF aims to provide leveraged exposure to “disruptive companies” without the need for a margin account. She also said their product will provide a “unique opportunity” for those looking to maximize their leveraged exposure to the flagship cryptocurrency, but with “an ETF wrapper.”
With the introduction of MSTX, our MicroStrategy leveraged long ETF, we are amplifying the potential for investors seeking leveraged long exposure to Bitcoin. Given MicroStrategy’s inherently higher beta relative to Bitcoin, MSTX offers a unique opportunity for investors to maximize their leveraged exposure to the Bitcoin market within an ETF wrapper.
According to the announcement, MicroStrategy’s “visionary approach to data analytics and business intelligence” has helped the company emerge as a leading player in the Bitcoin market. Additionally, the company’s BTC strategy, valued at over $15 billion, “has captured the attention of investors seeking leveraged exposure to Bitcoin.”
Michael Saylor, co-founder and chairman of MicroStrategy, recently highlighted MSTR’s performance since adopting Bitcoin as its primary treasury reserve asset in 2020. Since then, “$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 cautioned that its fund is not suitable for all investors. The ETF issuer 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 intended for use 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 own funds and monitor their investments should not purchase shares in the Funds.
Prior to the launch, ETF analyst Eric Balchunas weighed in on the approval and launch of MSTX. On August 14, the Bloomberg expert revealed that the investment product would be “the most volatile ETF you can get in the U.S. market” despite being “only” 1.75x.
Balchunas also noted that despite being the most volatile ETF in the U.S., MSTX “can’t hold a candle to the $3LMI LN in Europe, which is 3x Microstrategy, its 90-day volatility is over 350%, and it makes $TQQQ look like a money market fund.”
However, the analyst called the launch a “big step in the hot sauce arms race,” and suggested that Defiance likely “tried it twice, but the SEC rejected it.” Ultimately, he called the launch a “heatwave,” noting that MSTX is expected to take the top spot on the U.S. list of the most volatile ETFs 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
