Defiance ETFs is set to list a controversial new single-stock long leveraged exchange-traded fund (ETF) today, the MicroStrategy “MSTX” ETF. The MSTX aims to provide 175% long daily targeted exposure to the Nasdaq-listed software firm MicroStrategy, which already trades under the stock ticker MSTR. MicroStrategy, led by executive chairman Michael Saylor, recently reported that it has expanded its Bitcoin holdings to 226,500 in the second quarter of 2024. Defiance’s single-stock ETFs provide leveraged exposure to disruptive companies without the need for a margin account. The launch of MSTX is seen as an opportunity for investors seeking long leveraged exposure to Bitcoin.
The MSTX ETF is expected to be highly volatile, with Bloomberg Intelligence ETF analyst Eric Balchunas calling it one of the most volatile ETFs. Balchunas noted that the ETF could trade record amounts, indicating growing liquidity around the product. Defiance ETFs, founded in 2018, is an ETF issuer dedicated to income and thematic investing. Sylvia Jablonski, CEO of Defiance ETFs, mentioned that the introduction of MSTX, the long leverage MicroStrategy ETF, aims to amplify the potential for investors seeking leveraged exposure to Bitcoin. With MicroStrategy’s high beta compared to Bitcoin, MSTX offers a unique opportunity for investors to maximize their leverage exposure to the Bitcoin market within an ETF wrapper.
While the launch of the MSTX ETF is met with excitement by some, others are skeptical. Robin Wigglesworth, editor of Alphaville, questioned the product, calling it “leverage on leverage” and expressing concerns about the already high volatility of MicroStrategy. Wigglesworth criticized the SEC for not curbing such activities, warning that the crypto ETF landscape may get even more uncertain. The U.S. has a history of experimenting with and listing new and niche ETFs but has also seen a high number of closures, with 91 ETFs shutting down in the first half of 2024, according to ETFG data.
The launch of the MSTX ETF represents a unique opportunity for investors looking to gain leveraged exposure to Bitcoin through a single-stock ETF. With MicroStrategy’s significant Bitcoin holdings and the company’s high beta compared to the digital asset, the MSTX ETF aims to provide investors with amplified leverage exposure to the Bitcoin market. While the ETF is expected to be highly volatile, it has attracted attention from both investors and analysts for its innovative approach to leveraged exposure. As the crypto ETF landscape continues to evolve, the introduction of products like the MSTX ETF reflects the growing interest and demand for digital asset investments through traditional financial instruments.
Defiance ETFs’ decision to launch the MSTX ETF underscores the firm’s commitment to thematic and income investing. By introducing a single-stock ETF focused on MicroStrategy and its Bitcoin holdings, Defiance aims to offer investors a unique opportunity to access the digital asset market through leveraged exposure. While the launch of the MSTX ETF has sparked debate and skepticism, it also highlights the ongoing innovation and experimentation within the ETF industry. As investors navigate the evolving landscape of digital assets and traditional financial markets, products like the MSTX ETF provide a new avenue for accessing and investing in cryptocurrencies.
