Leveraged and short MicroStrategy ETPs debut in Europe

Mila September 26, 2024

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Key Takeaways

Leverage Shares launches 3x leveraged and inverse MicroStrategy ETPs on London Stock Exchange.
MicroStrategy holds 252,220 BTC, representing 1.2% of Bitcoin’s total supply.

Exchange-traded product (ETP) company Leverage Shares announced the launch of a MicroStrategy ETP leveraged three times and an inverse ETP on the London Stock Exchange. One of the issuer’s executives stated that the product is a way for investors to leverage their crypto exposure.

The three times leveraged ETPs, MST3 and MSTS, will be backed by MicroStrategy stocks. The announcement mentioned the tech company’s investments in Bitcoin (BTC).

“With MicroStrategy becoming a de facto proxy for Bitcoin investing, our MSTR ETPs enable traders to leverage their cryptocurrency outlook efficiently,” Oktay Kavrak, Director of Strategy and Communications at Leverage Shares, stated.

Kavrak added that the products could also be used to protect against market swings, calling the ETPs “highly liquid” and “centrally cleared.”

Bloomberg senior exchange-traded fund (ETF) analyst, Eric Balchunas, said that the European market’s appetite for risk through leveraged products is smaller compared to the US.

Moreover, Balchunas highlighted that both products will have up to 20 times the volatility presented by the S&P 500 index. “They will make 3x QQQ look like money mkt fund,” he added.

Notably, amid the recent BTC acquisitions, emission of $1 billion in senior convertible notes to acquire more crypto, and the cut in US interest rates, MicroStrategy shares soared 12.6% in the past five trading days.

The tech company led by Michael Saylor now holds 252,220 BTC, which is 1.2% of Bitcoin’s total supply.

MicroStrategy ETFs as a proxy

A leveraged MicroStrategy ETF debuted in the US last month, offering 1.75 leverage to investors. The MSTX, issued by Defiance, is the most volatile ETF traded in the country, according to Eric Balchunas.

The Bloomberg analyst also stated that MicroStrategy ETPs offering various ways of exposure, such as leverage and short, are likely to be added to other products. Thus, they serve as indirect exposure to Bitcoin through more sophisticated methods.

Those alternative ways to BTC exposure, such as the addition of options to BlackRock’s spot Bitcoin ETF, are seen by Balchunas as a “huge win,” as it attracts more liquidity from “big fish.”