The newly launched MSTX ETF provides 175% long daily targeted exposure to Microstrategy, a company known for its significant involvement in the bitcoin market. Microstrategy has strategically positioned itself as one of the largest bitcoin holders, holding approximately 226,500 bitcoins valued at $13.44 billion as of the second quarter of 2024.

Defiance’s new ETF allows investors to gain leveraged exposure without the need for a margin account, catering specifically to those who are actively managing their portfolios. “As we introduce MSTX, our long-leverage Microstrategy ETF, we’re amplifying the potential for investors seeking long-leveraged exposure to bitcoin,” Sylvia Jablonski, the CEO of Defiance ETFs remarked.

The Defiance executive added:

Given Microstrategy’s inherent higher beta compared to Bitcoin, MSTX offers a unique opportunity for investors to maximize their leverage exposure to the Bitcoin market within an ETF wrapper.

However, the MSTX ETF is not intended for all investors. It is designed for sophisticated traders who understand the risks associated with leveraged funds and who can actively monitor their investments. Due to the nature of its leveraged daily investment objective, the fund magnifies the performance of Microstrategy’s stock, making it significantly riskier than non-leveraged alternatives.

Leveraged ETFs like MSTX are inherently riskier because they amplify the underlying asset’s performance, in this case, Microstrategy, by 175%. This means that any movement in Microstrategy’s stock price—whether up or down—will be magnified by 1.75 times. While this can lead to significant gains, it also exposes investors to equally significant losses. Moreover, the daily reset feature of leveraged ETFs can cause performance to deviate substantially from the expected outcome over longer periods, particularly in volatile markets.

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