T-Rex Group Files for Leveraged ETFs Targeting MicroStrategy’s Bitcoin-Heavy Portfolio
T-Rex Group has filed for exchange-traded funds (ETFs) that aim to leverage the daily performance of MicroStrategy Incorporated (MSTR). The proposed ETFs will take 2x long and 2x inverse positions in MSTR, magnifying its daily stock performance by 200%.
Leveraged ETFs Focused on MicroStrategy
T-Rex Group, an ETF issuer, has filed with the U.S. Securities and Exchange Commission (SEC) to launch two ETFs centered on MicroStrategy (Nasdaq: MSTR), a company renowned for its substantial bitcoin (BTC) holdings. The T-Rex 2X Long MSTR Daily Target ETF aims to achieve 200% of MicroStrategy’s daily performance, while the T-Rex 2X Inverse MSTR Daily Target ETF will target a 2x inverse performance of MSTR.
Magnifying Daily Movements of MSTR
These ETFs are designed to amplify the daily movements of MSTR, which is significantly influenced by bitcoin’s price fluctuations. MicroStrategy, led by CEO Michael Saylor, has gained attention for its aggressive accumulation of bitcoin, holding 226,331 BTC on its balance sheet. The proposal notes that the implied volatility of MSTR stock offers both high-risk and high-reward opportunities for investors.
High Volatility and Risk
Bloomberg analyst Eric Balchunas remarked that these ETFs could become the most volatile ever seen in the U.S., potentially reaching 20 times the volatility of the S&P 500 (SPX). He described them as “the ghost pepper of ETF hot sauce.”
Intended for Sophisticated Investors
The filing acknowledges that the T-Rex 2X Long MSTR Daily Target ETF and its inverse counterpart are not suitable for all investors. These funds require active portfolio management and a sophisticated understanding of leveraged strategies. They are intended for short-term trading and are expected to experience high portfolio turnover due to daily rebalancing. The SEC filing highlights the significant risks involved, including potential losses if MSTR’s performance remains flat or experiences significant volatility.
