SEC Receives Application For 2X Leveraged MicroStrategy (MSTR) ETF
Exchange-traded fund issuer T-Rex Group filed for its 2X Long MSTR Daily Target ETF – a product analysts say could become the most volatile ETF in the United States – with the Securities and Exchange Commission (SEC) on Tuesday.
Per the company’s form N-1A, the fund seeks leveraged investment results that are “very different from most other exchange-traded funds.”
“The Fund may be riskier than alternatives that do not use leverage because the Fund’s objective is to magnify (200%) the daily performance of the publicly-traded common stock of MicroStrategy,” the filing stated.
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
MicroStrategy is a software analytics turned Bitcoin development company that holds the mantle of being the largest corporate BTC holder on Earth. It now controls over 226,331 BTC, surpassing 1% of the total network’s supply, as well as that held by the U.S. government.
Since the launch of Bitcoin ETFs and the asset’s subsequent surge earlier this year, analysts have regarded standard MicroStrategy as operating much like a leveraged Bitcoin ETF – an asset that is already notoriously volatile.
At present, MSTR is up 109% year to date compared to Bitcoin’s 37%, but it also tends to suffer worse drawdowns than BTC during market corrections.
A 2X leveraged MSTR ETF would exaggerate that volatility even further, doubling the daily performance of MSTR. That means if MSTR rises 10% in a day, T-Rex’s ETF will surge by 20%. Likewise, if MSTR falls by 10%, T-Rex’s
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