A financial services company, T-Rex Group, has taken a deeper interest in the ETF market. The firm filed for a highly leveraged MicroStrategy (MSTR) ETF in the US.
Given MicroStrategy’s heavy commitment to Bitcoin, a Bloomberg ETF analyst described T-rex’s move as “ghost pepper,” indicating the dicey nature of the latest investment.
T-Rex Files For 2X Long And Short-Leveraged MSTR ETF
The Securities and Exchange Commission’s EDGAR platform published T-Rex’s filing for 2X leveraged MicroStrategy ETF. According to the filing, T-Rex seeks 2X Long MSTR Daily Target ETF. It aims to garner 200% of MSTR’s daily performance through the ETF.
Additionally, the company filed for an ETF that takes a 2X invested position in MSTR. These filings indicate that two products would have both long and short-leveraged positions on Bitcoin.
Meanwhile, the recent move from T-Rex has sparked several reactions in the industry. The uproar is mainly due to MicroStrategy’s heavy exposure to Bitcoin.
MSTR has reflected high volatility based on its deep commitment to BTC, the largest crypto asset. Also, the stock’s implied volatility is as high as 85.6, though it trends lower than its latest average.
As such, Bloomberg senior ETF analyst Eric Balchunas labeled T-Rex’s filing as a “ghost pepper” of ETFs. He noted that if the SEC approves it, the product will expose investors to 20X the volatility of the typical S&P 500.
T-Rex just filed for the first-ever 2x Microstrategy $MSTR ETFs.. these are a near-lock to be most volatile ETFs ever seen in the US, will likely be in the neighborhood of 20x the volatility of SPX. The ghost pepper of ETF hot sauce. pic.twitter.com/NlUQMVTOxI
— Eric Balchunas (@EricBalchunas) June 27, 2024
Further, the analyst compared the volatility of a 3X leveraged MSTR ETF on the European market and $TQQQ. According to Balchunas, the Nasdaq 100 stock will appear as a money market fund due to the high volatility of the MSTR ETF.
MicroStrategy’s Unwavering Commitment To Bitcoin
Michael Saylor, the co-founder of MicroStrategy, has distinguished himself among the prominent Bitcoin proponents. He believes in the unfailing use of BTC as a financial hedge and store of value.
Founded in 1989, MicroStrategy started its Bitcoin acquisition in 2020. Under the chairmanship of Saylor, the company used its equity to leap into BTC purchases.
In a press release, the firm revealed its latest purchase of 11,931 BTC with proceeds from the sale of convertible notes. As of June 20, 2024, its Bitcoin holding has grown to 226,331 BTC tokens.
Currently, MicroStrategy’s cumulative BTC holding amounts to over 1% of the total Bitcoin mined supply. Moreover, the company has emerged as the largest institutional holder of Bitcoin.
Other firms have started adopting MicroStrategy’s footsteps and using Bitcoin as the primary treasury asset.
On April 9, a Japanese investment company, Metaplanent, disclosed its acquisition of about $6.5 million worth of Bitcoin. Following the announcement, the firm recorded an up to 89% surge in its stock value.
Similarly, on May 28, a medical-based firm, Semler Scientific, became more bullish about Bitcoin. The company bought 581 BTC tokens, worth about $40 million at the time of purchase.
Further, Semler disclosed its plans to adopt Bitcoin as its key treasury asset.
Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
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