T-Rex Group Files for 2x Long, Inverse Microstrategy ETF

Based on a document submitted to the Securities and Exchange Commission via their EDGAR system, the T-Rex 2X Long MSTR Daily Target ETF is designed to deliver twice the daily returns of MicroStrategy.

As an analyst, I’d describe it this way: T-Rex has applied for two Exchange-Traded Funds (ETFs) with opposite stances towards MicroStrategy (MSTR). One will adopt a 2x inverted position, which is equivalent to a leveraged short bet on MSTR. The other one would represent a leveraged long position in bitcoin since MSTR holds a significant amount of bitcoin as part of its investment strategy.

MSTR, renowned for its significant connection to bitcoin, is recognized for its price instability due to following the movements of the largest digital currency. The stock’s current estimated volatility stands at 85.6%, which is high, yet decreasing compared to its recent norms. Bitcoin’s price stability is a contributing factor to this trend.

Michael Saylor, the CEO, revealed that the company intends to issue $500 million worth of convertible notes to expand its Bitcoin investments.

In clear and natural language: According to Eric Balchunas, an analyst at Bloomberg for Exchange-Traded Funds (ETFs), these specific ETFs are likely to display significantly higher volatility than the S&P 500 index, with volatility approximately twenty times greater.

They will be the “ghost pepper of ETF hot sauce”, he said.

Defiance and GraniteShares are among the ETF providers who have introduced investment vehicles that bet against MicroStrategy (MSTR) in the market.

In March, T-Rex made applications for six Bitcoin ETFs that employ leverage and inverse strategies, with the proposed investment multipliers being 1.5 times to 2 times the benchmark.