Bitcoin bulls should steer clear of new leveraged MicroStrategy ETF
Leveraged ETFs chronically underperform comparable investments. There are better ways to place bullish bets on Bitcoin than MicroStrategy’s new ETF.
Acolytes of Bitcoin (BTC) billionaire Michael Saylor should steer clear of the new leveraged MicroStrategy (MSTR) exchange-traded fund (ETF). The ETF takes on needless risks and is almost certain to underperform spot BTC over time. There are better ways to bet on BTC.
On Aug. 15, Defiance ETFs — an asset manager specializing in “leveraged exposure to disruptive companies without the need for a margin account” — launched the Defiance Daily Target 1.75X Long MSTR ETF (MSTX). It reached $22 million in volume on its first day.
According to Defiance, MSTX is the “first single-stock long leveraged ETF for MicroStrategy” and “seeks to provide 175% long daily targeted exposure to” the stock. In practice, that means adding risky leverage to an already convoluted and speculative investment. It’s not worth the risk.
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Author: Alex O’Donnell
