• MicroStrategy’s 2x ETF MSTU gains 225%, reaching $1B AUM quickly.
  • MSTU behaves like 4x Bitcoin, bypassing US leverage restrictions effectively.

T-Rex’s 2x leveraged MicroStrategy ETF (MSTU) has surged in performance, now ranking among the top 1% of all ETFs by daily trading volume. Launched just six weeks ago, MSTU has posted a 225% gain, translating to an annual equivalent growth rate of 57,000%. This exponential rise is attributed to MicroStrategy’s strong link to Bitcoin (BTC) performance, as MSTU leverages the company’s stock, MSTR, which itself mirrors Bitcoin’s price movement.

Eric Balchunas, Bloomberg’s senior ETF analyst, notes that the MSTU effectively acts as a 4x Bitcoin ETF due to its structure. By doubling the already leveraged MicroStrategy stock, the product bypasses regulatory barriers that prevent the U.S. from directly launching 3x or 4x Bitcoin ETFs.

$MSTU is essentially a 4x Bitcoin ETF. Its 30d volatility is 168%. $IBIT is 41%. Notable bc you can't launch a 4x bitcoin ETF (or a even a 3x bitcoin ETF) in the US but.. by 2x-ing $MSTR (which is 2x btc) they effectively created the ultimate degen trading tool. What a country.. https://t.co/JEC7gInsXO

— Eric Balchunas (@EricBalchunas) October 28, 2024

Moreover, with its 30-day volatility at 168%, MSTU’s trading activity has soared to half a billion dollars daily. And the fund’s assets under management (AUM) have exceeded $1 billion. This AUM figure notably surpasses the original 1.75x MSTR ETF, highlighting the impact of even a slight increase in leverage.

Potential Overvaluation Warned

MicroStrategy’s MSTR stock has surged over 51% in the past month, with Monday’s rally setting an all-time high of $255 per share. This recent rally follows a 10:1 stock split in August, which renewed investor interest by making the shares more accessible. Since the company adopted its Bitcoin strategy in September 2020, MSTR stock has grown by 1,500%. It solidifies its reputation as a BTC proxy.

However, some experts warn of potential overvaluation. Notably, economist Peter Schiff recently compared MicroStrategy to gold mining companies, noting that its valuation now surpasses most gold miners, despite not producing tangible assets.

With MicroStrategy’s continued focus on Bitcoin, including plans to establish a Bitcoin bank, investors appear eager to ride the company’s Bitcoin-centric trajectory , even as analysts urge caution amidst volatile conditions.

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