The first Bitcoin-related leveraged exchange-traded fund (ETF) has debuted in the United States in another significant development for institutional crypto adoption.
The new leveraged MicroStrategy ETF, MSTX, seeks to provide 175% long daily targeted exposure to MicroStrategy.
The ETF could help offer more leveraged exposure to Bitcoin (BTC), according to Sylvia Jablonski, the CEO of Defiance ETFs, who said in an Aug. 15 announcement:
“We’re amplifying the potential for investors seeking long-leveraged exposure to Bitcoin. Given MicroStrategy’s inherent higher beta compared to Bitcoin, MSTX offers a unique opportunity for investors to maximize their leverage exposure to the Bitcoin market within an ETF wrapper."
ETF inflows can significantly contribute to a cryptocurrency’s price appreciation. For Bitcoin, ETFs accounted for about 75% of new investment in the cryptocurrency by Feb. 15 as it surpassed the $50,000 mark.
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MicroStrategy outperformed 499 out of 500 in the S&P 500 — Saylor
MicroStrategy is one of the first publicly traded companies to hold Bitcoin on its balance sheet.
The company has outperformed 99% of the firms in the S&P 500 index, according to an Aug. 11 X post by Michael Saylor, the founder of MicroStrategy, who wrote:
“Four years ago today, MicroStrategy adopted #Bitcoin as its primary treasury reserve asset; since then $MSTR has outperformed 499 of 500 stocks in the S&P 500.”
The new leveraged ETF could generate significant interest among investors due to MicroStrategy stock’s attractive price performance, which outperformed Bitcoin during the past months.
During the past six months, MicroStrategy shares rose over 70% while Bitcoin price only rose 13%, according to Bitstamp data.
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MSTX ETF is targeting “sophisticated investors”
Due to the risky nature of leveraged investments, the fund is not targeted toward retail, but more sophisticated investors, according to Defiance’s announcement:
“The Fund is not suitable for all investors. The Fund is designed to be utilized only by sophisticated investors, such as traders and active investors employing dynamic strategies.”
The ETF could indeed be the most volatile ETF in the US, according to Eric Balchunas, a senior ETF analyst at Bloomberg, who wrote in an Aug. 14 X post:
“It will be the most volatile ETF you can get in the US market (equiv to 13x SPY) edging out $MSOX (2x weed), a big step in the hot sauce arms race.”
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