On Thursday, Defiance Investments unveiled its new MicroStrategy Long Leveraged ETF (MSTX) following approval from the Securities and Exchange Commission (SEC) on Wednesday. The investment product aims to attract investors seeking long leveraged exposure to the largest cryptocurrency by market cap, Bitcoin (BTC).
MSTX to Offer Leveraged Exposure to Bitcoin
Defiance has unveiled the first “Long-Term Leveraged Single Stock ETF for MicroStrategy,” the largest holder of corporate stock in Bitcoin. The product aims to provide targeted long-term daily exposure of 1.75x (175%) to the company’s stock, 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. Additionally, she claimed their product will provide a “unique opportunity” for those looking to maximize their leveraged exposure to the flagship cryptocurrency, but with “an ETF wrapper.”
By launching MSTX, our MicroStrategy Long Leveraged ETF, we are amplifying the potential for investors seeking long-term leveraged 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.
According to the announcement, MicroStrategy’s “visionary approach to data analytics and business intelligence” has helped the company become a leading player in the Bitcoin market. Additionally, the company’s BTC strategy, valued at over $15 billion, “has attracted the attention of investors seeking leveraged exposure to Bitcoin.”
Michael Saylor, MicroStrategy co-founder and chairman, recently highlighted 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 United States
Defiance has warned that its fund is not suitable for all investors. The ETF issuer said MSTX is not intended for use by investors who do not actively monitor and manage their portfolios because it is riskier than non-leveraged alternatives.
The Fund is intended for use only by sophisticated investors, such as traders and active investors employing dynamic strategies. Investors who do not understand the Funds or who do not intend to actively manage their funds and monitor their investments should not purchase shares of the Funds.
Ahead of the launch, ETF analyst Eric Balchunas gave his thoughts 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 having a yield of “only” 1.75x.
Balchunas also pointed out that while it is the most volatile ETF in the US, MSTX “cannot compete with the $3LMI LN in Europe, which is 3x Microstrategy, its 90D volatility is over 350%, and makes the $TQQQ look like a money market fund.”
Still, the analyst sees the launch as a “big step in the hot sauce arms race” and suggested that Defiance likely “tried twice but the SEC pushed back.” Ultimately, he called the launch a “heat wave,” explaining that MSTX is likely to take the top spot on the U.S. list of 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
