Defiance Launches Leveraged ETF to Amplify MicroStrategy Gains

A new exchange-traded fund (ETF) that gives investors a chance to maximize returns on rising MicroStrategy stock just hit the market.

Dubbed MSTX and launched by Miami-based Defiance ETFs, the fund gives investors access to a leveraged position in a MicroStrategy stock investment.

Typical ETFs give investors exposure to an asset—be it a security or commodity—via shares that track its price and trade on stock exchanges. A “long leverage” ETF like MSTX also holds debt to amplify its position. Returns for investors can, therefore, be greater than the tracked asset—but losses can also be compounded.

“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,” Defiance ETFs CEO Sylvia Jablonski said Thursday. 

The company said the fund is aiming for 175% exposure to the stock.

Defiance ETFs warned that the fund “is not intended to be used by, and is not appropriate for, investors who do not intend to actively monitor and manage their portfolios.”

“The fund pursues a daily leveraged investment objective, which means that the fund is riskier than alternatives that do not use leverage because the fund magnifies the performance of its underlying security,” the firm added. 

MicroStrategy is the largest publicly traded company holding Bitcoin. The software firm started buying Bitcoin back in 2020.

Its stock (NASDAQ: MSTR) has since shot up—along with the price of Bitcoin—and has become a way for investors to get exposure to the cryptocurrency without buying it themselves. 

The firm currently holds 226,500 Bitcoins worth $12.8 billion at today’s $56,857 Bitcoin price. 

A number of crypto-focused ETFs currently exist in the U.S. market. Most notably, the Securities and Exchange Commission in January approved 10 Bitcoin ETFs—after saying no to applications for a decade—that track the price of the virtual coins. 

The funds were launched by prestigious asset managers like BlackRock and Fidelity and have since been hugely successful, receiving billions of dollars in investors’ cash. 

Edited by Ryan Ozawa.