Financial services firm T-Rex Group has filed in the U.S. for a leveraged MicroStrategy (MSTR) exchange-traded fund, which one analyst has described as the “ghost pepper” of ETFs because of its potential volatility.
Balchunas said that if the fund is approved, investors would be exposed to about 20 times the normal volatility of the S&P 500.
“These will almost certainly be the most volatile ETFs in U.S. history.” […] “The ghost pepper of ETF hot sauce,” Bloomberg ETF senior analyst Eric Balchunas said in a June 27 X post.
Balchunas pointed to the current volatility of the 3x leveraged MicroStrategy ETF in European markets and said the QQQ, an index of the 100 largest publicly traded companies in the U.S., looks like a “money market fund.”
MicroStrategy was founded as a software company in 1989 by current Chairman Michael Saylor. The company has since become one of the largest public holders of Bitcoin, currently holding a staggering 214,400 Bitcoin (BTC), valued at $13.2 billion.
Related: Why are traders shorting Michael Saylor’s MicroStrategy?
Bitcoin bull Saylor explains the reason he holds such a large amount of Bitcoin through his company is because Bitcoin is a hedge against inflation and a better alternative to holding cash.
MicroStrategy’s shares have risen 120% since the beginning of this year and 336% since the same time last year, driven in part by the strong rise in Bitcoin’s price during the same period.
Bitcoin is currently trading at $61,589, up 104% over the past year, according to TradingView. data.
Saylor first adopted a bitcoin-focused acquisition strategy in 2020, using his MicroStrategy shares to begin buying large amounts of bitcoin.
In recent months, several other firms have followed MicroStrategy’s lead and begun adopting bitcoin-focused financial hedging strategies.
On April 9, Japanese investment firm Metaplanet announced it would purchase $6.5 million worth of Bitcoin for its core treasury, a move that caused the company’s shares to soar by more than 89% on the day.
On May 28, healthcare company Semler Scientific also purchased 581 BTC for $40 million as part of its core financial strategy.
Most recently, on June 10, DeFi Technologies, a Canadian exchange-traded fund (ETP) issuer and venture capital firm, announced it had acquired 110 Bitcoin for its core reserve assets.
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