T-Rex Group, a financial services company, has recently filed for a 2x leveraged MicroStrategy (MSTR) exchange-traded fund (ETF) in the United States. This new financial vehicle is expected to be one of the most volatile ETFs in the country if approved. The main objective of the fund, named as ‘T-Rex 2X Long MSTR Daily Target ETF,’ is to amplify the daily performance of the publicly traded common stock of MicroStrategy by 200%.
The Ghost Pepper of ETFs
Bloomberg’s Senior ETF analyst, Eric Balchunas, has highlighted the potential extreme volatility of this new ETF. If approved, this fund could exhibit fluctuations up to 20 times greater than the S&P 500, making it potentially the most volatile ETF in the US market. Balchunas has even compared the volatility of this ETF to a 3X leveraged MicroStrategy ETF available in Europe, emphasizing the significant fluctuations already present in that market. In comparison, the QQQ index tracking top US companies appears stable as a money market fund.
MicroStrategy, founded in 1989 by Michael Saylor, has become the largest publicly traded holder of Bitcoin. The business intelligence company currently holds an impressive 214,400 BTC valued at $13.2 billion on its balance sheet. On the other hand, T-Rex has filed for six leveraged inverse Bitcoin ETFs with 1.5x-2x leverage, showing their interest in the cryptocurrency market as well.
The introduction of the T-Rex 2X Long MSTR Daily Target ETF could have significant implications for investors. While the potential for high returns is present due to the leveraged nature of the fund, the extreme volatility could also lead to substantial losses. Investors will need to carefully consider their risk tolerance and investment goals before considering this ETF as part of their portfolio.
Overall, the filing of the T-Rex 2X Long MSTR Daily Target ETF introduces a new level of volatility to the US market. It will be interesting to see how regulators respond to this proposal and whether investors are willing to take on the risk associated with such a high-risk ETF.