‘Maximizing Leverage Exposure To Bitcoin’: Defiance Launches First Leveraged MicroStrategy ETF

On Thursday, Defiance Investments unveiled its new long-leveraged MicroStrategy ETF (MSTX) following Wednesday’s Securities and Exchange Commission (SEC) approval. The investment product aims to attract investors seeking long-leverage exposure to the largest cryptocurrency by market capitalization, Bitcoin (BTC).

MSTX To Offer Leverage Exposure To Bitcoin

Defiance revealed the first “single-stock long leveraged ETF for MicroStrategy,” the largest corporate holder of Bitcoin. The product seeks to provide 1.75 x (175%) long daily targeted exposure to the company’s stock, MSTR.

Sylvia Jablonski, Defiance’s CEO, stated that the single-stock ETF aims to provide leverage exposure to “disruptive companies” without needing a margin account. Additionally, she claimed that their product will offer a “unique opportunity” to those who want to maximize their leverage exposure to the flagship cryptocurrency but with “an ETF wrapper.”

As we introduce MSTX, our long leverage MicroStrategy ETF, 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.

Per the announcement, MicroStrategy’s “visionary approach to data analytics and business intelligence” has made the company emerge as a prominent player in the Bitcoin market. Moreover, the company’s BTC strategy, estimated at over $15 billion, “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 500 stocks in the S&P 500.”

Most Volatile ETF In The US

Defiance warned that its fund is not appropriate for all investors. The ETF issuer clarified that MSTX is not intended to be used by investors who don’t actively monitor and manage their portfolios, as it is riskier than the alternatives not using leverage.

The Fund is designed to be utilized only by sophisticated investors, such as traders and active investors employing dynamic strategies. Investors who do not understand the Funds, or do not intend to actively manage their funds and monitor their investments should not buy shares of the Funds.

Ahead of the launch, ETF analyst Eric Balchunas weighed in on the MSTX’s approval and launch. On August 14, the Bloomberg expert revealed that the investment product would be the “most volatile ETF you can get in the US market” despite being “only” 1.75x.

Balchunas also pointed out that, despite being the most volatile ETF in the US, MSTX “can’t hold a candle to $3LMI LN in Europe, which is 3x Microstrategy, it’s 90D volatility is over 350%, and makes $TQQQ look like a money market fund.”

Nonetheless, the analyst considers the launch a “big step in the hot sauce arms race” and suggested that Defiance probably “tried 2x but SEC pushed back.” Ultimately, he called the launch a “heat wave,” explaining that MSTX is estimated to take the top spot on the US list of the most volatile ETFs on its first day.