A newly launched leveraged MicroStrategy ETF is gaining momentum as its assets surge and its stock reaches an all-time high.
The T-REX 2X Long MSTR Daily Target ETF has attracted over $82 million in assets just a week after its debut. Eric Balchunas, Bloomberg’s head of ETFs, notes that these inflows position it among the top twenty of the 515 funds introduced this year.
MSTU’s stock soared to a record peak of $44 on Friday, Sept. 27, marking an 81% increase from its opening price, making it one of the standout performers on Wall Street. It has also surpassed the performance of MicroStrategy stock, which has increased by 35% during the same time frame.
MSTU is a leveraged ETF designed to achieve 200% of the daily performance of MicroStrategy stock. For instance, when MicroStrategy shares increased by 6.6% on Friday, the MSTU fund surged by 13%.
Historically, leveraged funds thrive when their underlying asset is experiencing an upward trend and vice versa. For example, the ProShares UltraPro ETF, which tracks the Nasdaq 100 index, has gained 373% over the last five years, while the ProShares UltraPro Short QQQ has plummeted by 98.8% during the same timeframe.
Both MSTU and MSTX funds have gained from MicroStrategy’s resurgence amidst the ongoing Bitcoin bull market. Bitcoin (BTC) has climbed to $66,000 for the first time in two months, continuing its rally that began earlier this month.
MicroStrategy shares frequently outperform Bitcoin due to the company’s substantial BTC holdings. The stock has appreciated by 457% over the past year, while BTC has increased by 151% in the same timeframe.
Recently, the company invested over $458 million into Bitcoin, bumping its total holdings to 252,220 coins valued at $16.7 billion.
Numerous analysts are optimistic about Bitcoin’s potential for continued growth, buoyed by anticipated Federal Reserve interest rate cuts leading up to the upcoming U.S. general election and the recent release of Changpeng Zhao from prison.
Furthermore, major investors (whales) have continued to accumulate Bitcoin, while exchanges’ balances have fallen to their lowest levels this year. Blackrock has been actively adding to its Bitcoin holdings, increasing by 5,894 coins over the last three days.
