Defiance Launches MicroStrategy ETF Today, First Single-Stock ETF in US

Bitcoin MicroStrategy

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Tanzeel Akhtar

Journalist

Tanzeel Akhtar

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Tanzeel Akhtar has been covering the cryptocurrency and blockchain sector since 2015. She has written for the Wall Street Journal, Bloomberg, CoinDesk, Bitcoin Magazine and Bitcoin.com.

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August 21, 2024 02:21 EDT

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Defiance ETFs is set to list a controversial new single-stock long leveraged exchange-traded fund (ETF) today, the MicroStrategy “MSTX” ETF.

In an announcement, Defiance said the MSTX aims to provide 175% long daily targeted exposure to the Nasdaq-listed software firm MicroStrategy which already trading under the stock ticker MSTR.

Defiance said its single-stock ETFs provide leveraged exposure to disruptive companies without the need for a margin account.

MicroStrategy is led by executive chairman Michael Saylor, and in recent earnings reported that it has expanded its Bitcoin holdings to 226,500 in the second quarter of 2024.

Volatile Road Ahead for MSTX ETF

Those who invest in Bitcoin will know volatility is the name of the game. But the MSTX ETF is expected to be one of the most volatile ETFs, says Bloomberg Intelligence ETF analyst Eric Balchunas.

“The hot sauce arms race continues as Defiance launching a -1.5x MSTR ETF tmrw, which will be one of most volatile ETFs ever but a touch less than top dog $MSTX (1.75x long MSTR) which btw has traded a record $50m today- could hit $100m,” said Balchunas.

Behind the listing is Defiance ETFs, a firm founded in 2018, it is an ETF issuer dedicated to income and thematic investing.

“As we introduce MSTX, our long leverage MicroStrategy ETF, we’re amplifying the potential for investors seeking long leveraged exposure to Bitcoin,” said says Sylvia Jablonski, CEO of Defiance ETFs.

“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,” adds Jablonski.

MSTX ETF Launch Met With Scepticism

Picking the product apart, Robin Wigglesworth the editor of Alphaville, questions what the fresh hell is this? He adds that the SEC’s lack of willingness or ability to curtail this nonsense means things will just get sillier in the crypto ETF landscape.

“So that’s leverage on leverage on an underlying asset that is already rife with leveraged trading. MicroStrategy’s one-year volatility is already 95.9, nearly eight times $SPY, State Street’s S&P 500 ETF. MSTX’s 1.75 times leverage would crank that up to eyewatering levels,” writes Wigglesworth in a FT blog post.

The U.S. is quick to experiment and list new and niche ETFs. But has also experienced the highest number of closures, with 91 ETFs shutting down in the first half of 2024, according to ETFG data.