T-Rex files for ‘ghost pepper’ 2X leveraged MicroStrategy ETF
Financial services firm T-Rex Group has filed for a leveraged MicroStrategy (MSTR) exchange-traded fund in the United States — with one analyst describing it as a “ghost pepper” of ETFs due to its potential volatility.
Balchunas said if the fund were to be approved, it would expose investors to around 20 times the typical volatility of the S&P 500.
“These are a near-lock to be most volatile ETFs ever seen in the US [...] The ghost pepper of ETF hot sauce,” senior Bloomberg ETF analyst Eric Balchunas wrote in a June 27 post on X.
Balchunas pointed to the current volatility of a threee times-leveraged Microstrategy ETF on the European market, saying that it made the QQQ — an index of the top 100 publicly traded companies in the United States — look like a “money market fund.”
MicroStrategy was founded as a software company in 1989 by now-executive chairman Michael Saylor. Since then, it has become one of the largest publicly traded holders of Bitcoin, currently holding a staggering 214,400 Bitcoin (BTC) — worth $13.2 billion — on its books.
Related: Why are traders shorting Michael Saylor’s MicroStrategy?
An outspoken Bitcoin (BTC) bull, Saylor has given reasoning for holding such vast quantities of Bitcoin through the company — the asset is a hedge against inflation and a superior alternative to holding cash.
MicroStrategy shares are up 120% from the start of this year and 336% from this time last year, aided by a significant boon in the price of Bitcoin in the same timeframe.
Bitcoin is currently changing hands for $61,589, up 104% in the last year, per TradingView data.
Saylor first adopted a primarily Bitcoin-focused acquisition strategy in 2020, using MicroStrategy equity to start buying up large chunks of Bitcoin.
In recent months, several other companies have begun taking notes from MicroStrategy’s playbook, adopting a Bitcoin-focused treasury-hedging strategy.
On April 9, Japanese investment firm Metaplanet announced the purchase of $6.5 million worth of Bitcoin as a core treasury asset, a move that saw its stock price soar more than 89% on the day.
On May 28, healthcare firm Semler Scientific purchased 581 BTC for a price of $40 million, also as part of its core treasury strategy.
Most recently on June 10, Canadian exchange-traded product (ETP) issuer and venture capital firm DeFi Technologies announced the acquisition of 110 Bitcoin as its company’s core reserve asset.
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