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Asset managers REX Shares and Tuttle Capital Managed jointly launched two exchange-traded funds (ETFs) designed to provide leveraged exposure to MicroStrategy’s (MSTR) share performance, according to a Sept. 18 announcement.&nbsp;
The ETFs — T-REX 2X Long MSTR Daily Target ETF (MSTU) and T-REX 2X Inverse MSTR Daily Target ETF (MSTZ) — aim for two-times leveraged long and short exposure to MSTR, respectively, REX and Tuttle <a data-ct-non-breakable="null" href="https://www.businesswire.com/news/home/20240918234978/en/REX-Shares-and-Tuttle-Capital-Management-Launch-2x-Leveraged-and-Inverse-MSTR-Daily-Target-ETFs" rel="null" target="null" text="null" title="null">said</a>.
The ETF launches follow the August launch of a similar ETF by rival issuer Defiance ETFs, which demonstrated strong demand among retail investors for leveraged exposure to MSTR.&nbsp;
The new entrants may set off a “hot sauce arms race,” Eric Balchunas, a Bloomberg Intelligence ETF analyst, said in a Sept. 18 <a data-ct-non-breakable="null" href="https://x.com/EricBalchunas/status/1836405902015922437" rel="null" target="null" text="null" title="null">post</a> on the X platform.
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 <img alt="REX Shares, Tuttle launch 2X long, short MicroStrategy ETFs" name="" src="https://s3.cointelegraph.com/uploads/2024-09/019205cb-dba1-767b-b07f-2300642d94f7">
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 Source: <a data-ct-non-breakable="null" href="https://x.com/EricBalchunas/status/1836405902015922437" rel="nofollow noopener" target="_blank" text="null" title="https://x.com/EricBalchunas/status/1836405902015922437">Eric Balchunas</a>
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Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/bitcoin-bulls-should-steer-clear-new-leveraged-microstrategy-etf" rel="null" target="null" text="null" title="null">Bitcoin bulls should steer clear of MicroStrategy's new leveraged ETF</a>
In August, rival issuer Defiance ETFs launched the first leveraged MSTR ETF, Defiance Daily Target 1.75X Long MSTR ETF (MSTX). It seeks to deliver 175% exposure to MSTR’s performance.
Defiance’s ETF saw $22 million in volume in its first day of trading, “which may be a Day One record for a leveraged ETF,” Eric Balchunas, a Bloomberg Intelligence ETF analyst, said in an Aug. 15 <a data-ct-non-breakable="null" href="https://x.com/ericbalchunas/status/1820472388372373563" rel="null" target="null" text="null" title="null">post</a> on the X platform.
REX and Tuttle’s competing ETFs “will leapfrog Defiance’s 1.75x MSTR (which has been an instant hit)” and “will deliver volatility estimated to be about 15x that of SPX,” Balchunas said.&nbsp;
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 <img alt="REX Shares, Tuttle launch 2X long, short MicroStrategy ETFs" name="" src="https://s3.cointelegraph.com/uploads/2024-09/019205cd-65d8-746f-a116-abdd717b20b1">
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 MSTX already has more than $186 million in net assets. Source: Defiance ETFs
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Originally a business intelligence firm, MicroStrategy transformed into a de-facto cryptocurrency hedge fund in 2020 when founder Michael Saylor started using the company’s balance sheet to buy Bitcoin (<a data-ct-non-breakable="null" href="https://cointelegraph.com/bitcoin-price" rel="" target="_self" text="null" title="https://cointelegraph.com/bitcoin-price">BTC</a>).
On Aug. 1, MicroStrategy adopted a new lodestar for corporate performance: “Bitcoin Yield”, a measure of BTC-per-share. Its goal is to leverage its balance sheet to accumulate BTC on terms favorable to shareholders.
On Sept. 16, MicroStrategy announced <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/micro-strategy-announces-third-debt-offering-2024-plans-raise-700-m" rel="null" target="null" text="null" title="null">plans to issue $700 million</a> in debt, partly to buy more BTC.
Leveraged ETFs add additional risk to MSTR and tend to underperform to do the costs of daily rebalances to maintain a leverage target. They also typically hold financial derivatives rather than the underlying stock.&nbsp;
The ETFs “provide traders with a powerful set of tools to engage with a company that’s pushing the boundaries in digital assets,” Greg King, CEO of REX Financial, REX Shares parent company, said in a statement.
Magazine: <a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/solana-printing-tokens-bots-subsidies/" rel="null" target="null" text="null" title="null">What Solana’s critics get right… and what they get wrong</a>

REX Shares, Tuttle launch 2X long, short MicroStrategy ETFs

Cointelegraph

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