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MSTU and MSTX: these MicroStrategy ETFs are booming

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Leveraged MicroStrategy exchange-traded funds are firing on all cylinders as inflows and their stocks surge. 

MicroStrategy ETFs surge

The Defiance Daily Target 1.75x Long MSTR ETF and the T-Rex 2x Long MSTR Daily Target funds have soared by 28% and 31%, respectively, in the last five days. MSTX and MSTU have also added over $207 million and $300 million in assets this year.

These ETFs have outperformed MicroStrategy stock, which has risen by 16.1% in the last five days. 

The three assets continued their strong performance on Monday, Oct. 14, as Bitcoin (BTC) and other cryptocurrencies rebounded. MicroStrategy shares jumped by over 5.3% in pre-market trading, while MSTX and MSTU ETFs rose by 9.50% and 10.6%, respectively.

MSTU vs MSTX vs MSTR | Source: SeekingAlpha

Bitcoin, the largest cryptocurrency by market capitalization, rose to $65,000 for the first time since Sep. 30, as the crypto fear and greed index exited the fear zone.

The potential catalyst for the rally was the decision by Chinese officials to offer more stimulus. In a statement, Finance Minister Lan Fo’an pledged to continue supporting the ailing property sector and hinted that the government would boost spending.

As a result, analysts at Goldman Sachs boosted their outlook for the economy. They now expect the economy to grow by 4.9%, higher than their previous estimate of 4.7%.

This statement led to a more upbeat tone in the financial markets, with stock indices in the US, Asia, and Europe continuing their uptrend.

MicroStrategy’s shares often react to Bitcoin’s price action due to the company’s substantial holdings. According to BitcoinTreasuries, it holds 252,220 coins in its balance sheet worth $16.3 billion. 

MSTU and MSTX offer a high-risk, high-reward opportunity

Leveraged ETFs like MSTU and MSTX offer MicroStrategy investors a high-risk, high-reward opportunity by using leverage.

MSTU’s stock rises by 2x when MicroStrategy rises by 1% in a day, while MSTX rises by 1.75%. As such, their total returns over time are usually strong when MicroStrategy shares are soaring.

MSTU and MSTX aim to replicate the success of other leveraged ETFs, such as the ProShares UltraPro QQQ, which tracks the Nasdaq 100 index. The index has risen by 430% in the last ten years, while the TQQQ fund has jumped by over 2,360% in the same period.

However, the risk comes when the underlying asset underperforms. For example, the TQQQ ETF dropped by 79% in 2022 when the Nasdaq 100 index fell by 32%.

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Bitcoin

MicroStrategy wraps up $1.01b convertible notes offering in 4 days

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MicroStrategy has completed its $1.01 billion offering of convertible senior notes, set to mature in 2028, less than a week after announcing the sale.

MicroStrategy, one of the largest corporate Bitcoin (BTC) holders, said in a press release on Friday, Sept. 20, that it has completed a $1.01 billion offering of 0.625% convertible senior notes due 2028, less than a week after announcing the sale.

The notes were sold to institutional investors under Rule 144A of the Securities Act, with net proceeds intended to “acquire additional Bitcoin and for general corporate purposes.”

The Virginia-headquartered company issued the notes with a 40% premium over its common stock price, setting an initial conversion price of approximately $183.19 per share. MicroStrategy exercised an option allowing an additional $135 million in notes to be issued, bringing the total to $1.01 billion.

MicroStrategy raises over $1b to buy more Bitcoin

The raised capital will be used to redeem the company’s $500 million 6.125% senior secured notes due 2028, originally secured with 69,080 BTC. The remaining funds will be directed toward the purchase of additional crypto and for general corporate purposes.

The notes are convertible into either cash, shares of common stock, or a combination of both at MicroStrategy’s discretion.

MicroStrategy, founded by Michael Saylor, continues to double down on its Bitcoin strategy, despite market volatility. The company is one of the largest institutional holders of Bitcoin, owning around 244,800 BTC as of September, worth over $15.4 billion. This offering comes on the heels of MicroStrategy’s recent purchase of 18,300 BTC for $1.11 billion, underscoring its commitment to expanding its crypto holdings.

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Bitcoin

MicroStrategy increases convertible note offering by 25% to buy more Bitcoin

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MicroStrategy has raised its convertible note offering to $875 million, with plans to use the proceeds for redeeming existing debt and acquiring more Bitcoin.

Business intelligence firm MicroStrategy, one of the largest corporate holders of Bitcoin (BTC), said in a press release on Wednesday, Sept. 18, that it increased its offering to $875 million in convertible senior notes due 2028, up 25% from a previously announced $700 million.

According to the press release, the company, known for its aggressive Bitcoin acquisition strategy, plans to use the net proceeds to redeem all $500 million of its outstanding 6.125% senior secured notes due 2028 and allocate the remainder “to acquire additional Bitcoin and for general corporate purposes.” MicroStrategy estimates the net proceeds from the offering will be approximately $864.1 million, or $997.4 million if purchasers fully exercise their option to buy an additional $135 million in notes.

MicroStrategy seeks institutional backing for Bitcoin growth

The move comes just a week after MicroStrategy acquired an additional 18,300 BTC for approximately $1.11 billion, boosting its total reserves to approximately 244,800 BTC, which were acquired at an aggregate purchase price of approximately $9.45 billion and an average purchase price of around $38,585 per BTC.

The notes, carrying an interest rate of 0.625% per annum, will be sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933 and will mature on Sept. 15, 2028, according to the press release. They will be unsecured senior obligations, with holders having the option to convert them into cash, shares of MicroStrategy’s Class A common stock, or a combination of both.

The offering is expected to close on Sept. 19, subject to customary conditions, MicroStrategy noted.

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Bitcoin

Institutional demand for Bitcoin mining stocks on the rise, analyst says

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Institutional interest in Bitcoin mining stocks is surging, analysts at H.C. Wainwright said after hosting an investment conference in New York. 

The HCW Annual Global Investment Conference gathered major publicly traded Bitcoin (BTC) miners and industry leaders like MicroStrategy’s Michael Saylor. The main takeaway, according to the firm’s Managing Director and Crypto Analyst Mike Colonnese, was an increase in institutional involvement compared to previous years.

The analysts stated in a note shared with crypto.news that the approval of spot Bitcoin ETFs in January, combined with increasing demand for AI-driven power infrastructure, has piqued investor interest in Bitcoin mining equities and stocks.

Bitcoin mining stocks 

Despite a 40% decline in mining stocks since mid-July, compared to Bitcoin’s 10% drop, industry insiders believe the sector is undervalued, presenting potential investment opportunities ahead of the next bull market.

Key themes from the event included major miners’ capacity expansions, efforts to upgrade fleets with more efficient ASIC machines, and a resurgence in miners holding their Bitcoin assets. Additionally, some miners are diversifying into AI and high-performance computing, leveraging their power infrastructure.

Bitcoin price targets

Panelists at the event expressed optimism about Bitcoin’s future, predicting prices ranging from $100,000 to $250,000 in the next cycle, with an average forecast of $144,000 by the end of 2025. 

On Sept. 12, Michaël van de Poppe, Chief Investment Officer at MN Consultancy, said in a X post that he wouldn’t be surprised if Bitcoin reached between $300,000 and $600,000 in this market cycle.

On Sept. 13, Saylor’s company MicroStrategy announced that it continued its Bitcoin acquisition strategy, purchasing 18,300 BTC for $1.11 billion between Aug. 6 and Sept. 12. This brought the company’s total Bitcoin holdings to 244,800 BTC, acquired at an average price of $38,585 per coin. 

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Bitcoin

MicroStrategy buys additional 18,300 BTC for more than $1b

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Business intelligence firm MicroStrategy is continuing its Bitcoin allocation strategy, this time acquiring over 18,000 BTC.

MicroStrategy, one of the largest corporate crypto holders in the world, announced in a press release on Friday, Sept. 13, that it acquired an additional 18,300 Bitcoins (BTC) for approximately $1.11 billion at an average price of $60,408 per BTC. According to the regulatory filing, the company acquired Bitcoin between Aug. 6 and Sept. 12.

With the latest transaction, the Virginia-headquartered company now holds approximately 244,800 BTC, which were acquired at an aggregate purchase price of approximately $9.45 billion and an average purchase price of around $38,585 per BTC, inclusive of fees and expenses, the filing reads.

Shares of MicroStrategy rose 0.3% in pre-market trading following the news, according to Nasdaq data.

MicroStrategy controls over 1% of Bitcoin

This marks another significant Bitcoin purchase by the company in 2024, following a 12,000 BTC acquisition in June and 9,245 BTC in March. The firm now holds over 1% of Bitcoin’s fixed supply of 21 million.

In August, MicroStrategy indicated plans to raise up to $2 billion by selling Class A shares to fund its crypto strategy. While the exact timeline for selling these shares was not disclosed, the filing reads that the proceeds will be used for “general corporate purposes, including the acquisition of Bitcoin.”

The company did not specify how much of the proceeds will be used for Bitcoin purchases, stating it has not determined the amount of net proceeds “to be used specifically for any particular purpose.”

MicroStrategy has consistently used share sales to fund its Bitcoin purchases. In late 2023, the company sold $750 million worth of shares with the intention of buying more Bitcoin. Subsequent reports confirmed multi-million dollar acquisitions of the cryptocurrency, reinforcing its commitment to its Bitcoin-centric strategy.

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Bitcoin

Bitcoin to reach $13m in 21 years, Michael Saylor predicts

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Michael Saylor, MicroStrategy’s executive chairman, expects Bitcoin to capture 7% of global capital in the coming years and outclass other assets.

On Sept. 9, Bitcoin (BTC) was trading just under $55,000 after a 2% rise in 24 hours, according to crypto.news price pages. Saylor told CNBC that this price would increase by 70 times as adoption skyrockets, placing BTC at $3.85 million per coin soon.

Saylor explained that the thesis behind Bitcoin’s exponential price leap is rooted in its technological superiority over other assets and its yearly returns.

Since August 2020, when MicroStrategy began buying BTC, the cryptocurrency has rewarded investors with an average of 44% in annual profits. In comparison, the S&P 500 has averaged 12% over the same four-year period.

MicroStrategy’s founder also affirmed the software maker’s leveraged Bitcoin strategy.  According to Saylor, securitizing BTC by selling convertible bonds to buy more crypto has yielded 825% on MicroStrategy’s capital. Nvidia, the S&P’s best-performing stock, has managed 821%.

The billionaire entrepreneur also argued that recent outflows from spot BTC exchange-traded funds (ETFs) would increase investor demand. Last week, Wall Street traders pulled $1.2 billion from BTC ETFs due to global financial market volatility, according to Bloomberg. Crypto products recorded the second-largest week of outflows this year as well.

Bitcoin to command more global capital

In the long run, the former crypto skeptic turned BTC evangelist insists that HODL’ers will outperform volatility traders and those primarily focused on the asset’s short-term price movements.

HODL is crypto jargon for “holding on for dear life,” a term derived from the word “hold” and used to describe a long-term outlook on digital assets.

Saylor’s short-term view places BTC close to $4 million, but his longer outlook predicts an even larger price tag. The Bitcoin maximalist predicted that Bitcoin would trade at $13 million per coin within 21 years. Currently, Bitcoin’s trillion-dollar market cap commands 0.1% of global capital, but Saylor believes this number will surpass 13% before 2050.

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Bitcoin

Bitcoin miner Vortex Brands puts MicroStrategy shares on balance sheet

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Bitcoin mining firm Vortex Brands has begun acquiring MicroStrategy stock as part of a new strategy to leverage its Bitcoin-focused business model and enhance its investment holdings.

Crypto mining firm Vortex Brands has initiated a new investment strategy by acquiring shares of MicroStrategy, a move aimed at capitalizing on the company’s Bitcoin-centric approach.

With the new strategy, the Bitcoin mining firm purchased an initial 10 shares of MSTR and plans to add “at least that many shares monthly and report holdings quarterly,” an Aug. 28 press release reads. Vortex Brands CEO Todd Higley says integrating MicroStrategy stock into the firm’s portfolio will allow it to “leverage the arbitrage strategy MicroStrategy employs between the corporate public markets and the value of Bitcoin.”

“This move aligns with our positive outlook for Bitcoin and our belief in hard assets, including certain digital assets, as the preferred investment and business activity in today’s post-low-inflation environment.”

Vortex Brands CEO, Todd Higley

This strategy comes amid activity in the Bitcoin investment landscape focused on MicroStrategy as one of the largest public (BTC) holders.

Earlier in August, South Korea’s National Pension Service disclosed a significant investment in MicroStrategy, purchasing nearly $34 million worth of shares in Q2. The NPS acquired 24,500 shares at an average price of $1,377.48 each, which, following a recent 10-for-1 stock split, has resulted in a holding of 245,000 shares valued at approximately $32.3 million based on the latest closing price of $131.9.

In addition to its investment in MicroStrategy, the NPS also holds a big chunk of Coinbase shares, with 229,807 shares valued at over $45 million, reflecting the growing interest in the crypto space.

With the latest investment strategy, Vortex Brands is also preparing to unveil a new division aimed at diversifying its revenue streams while enhancing its Bitcoin mining operations to increase its crypto accumulation, the press release reads.

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Bitcoin

MicroStrategy ETF accumulates $127m in assets, $100m daily volume

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The newly launched MicroStrategy leveraged ETF, trading under the ticker $MSTX, is rapidly gaining traction on Wall Street.

The MSTX ETF has amassed $127 million in assets within just six days of its debut, said Eric Balchunas, senior ETF Analyst for Bloomberg. 

The ETF, which seeks to deliver 175% of MicroStrategy’s daily stock return, has been trading at over $100 million in volume per day, showing strong investor interest in MicroStrategy and Bitcoin (BTC).

On August 23, the ETF surged by 20% after a volatile week that included a 10% decline the previous day. Due to its high volatility and potential for significant short-term gains and losses, Balchunas described the ETF as the “mechanical bull” of ETFs.

Issued by Defiance ETFs, known for its thematic and leveraged funds, $MSTX allows investors to amplify their exposure to Bitcoin, as MicroStrategy’s stock is widely viewed as a proxy for the cryptocurrency.

MicroStrategy’s goals 

MicroStrategy is one of the largest corporate holders of Bitcoin. The company recently announced plans to raise $2 billion by selling its class A shares to further invest in Bitcoin and repay debt. 

In its Q2 financial results, MicroStrategy reported acquiring 12,222 Bitcoin at a total cost of over $805 million, bringing its total Bitcoin holdings to 226,500.

South Korea’s National Pension Service has invested $33.75 million in 24,500 shares of MicroStrategy, and other funds like Japan’s GPIF and Michigan’s Retirement System are also participating through ETFs. This growing institutional interest suggests a cautious but notable shift towards integrating Bitcoin into traditional investment portfolios.

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Altcoin

Spot Bitcoin ETFs witness inflows of $11.11m, Ether ETFs break 3-day inflow streak

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Spot Bitcoin exchange-traded funds in the United States saw positive flows again, in contrast to spot Ethereum ETFs, which saw substantial outflows, ending their three-day run of gains.

Data from SoSoValue reveals that on Aug. 15, the twelve U.S. spot Bitcoin ETFs registered a collective inflow of $11.11 million, ending their short-lived negative flow witnessed the previous day.

Fidelity’s FBTC led the charge with inflows of $16.2 million followed by Grayscale’s Bitcoin mini trust and Biwise’s BITB which saw $13.7 million and $6.2 million inflows, respectively. Grayscale’s GBTC was the only offering to see outflows of $25 million on the day, bringing its total net outflows to $19.57 billion since its launch. The remaining seven Bitcoin ETFs reported no changes in their inflows or outflows for the day.

Spot Ether ETFs see substantial outflows

Conversely, the nine Ethereum ETFs collectively saw $39.21 million in outflows on Aug. 15, a flip from the previous daily inflows of $10.8 million and $24.3 million. Leading the outflows was Grayscale’s ETHE, with continued outflows of $42.5 million and accumulating total outflows of $2.38 billion since its inception.

Meanwhile, Fidelity’s FETH and BlackRock’s ETHA saw modest inflows of $2.5 and $0.8 million, respectively, on the day. The remaining seven Ethereum ETFs showed no significant activity. Despite these outflows, Ether ETFs experienced a jump in trading volume, totaling $240.58 million, higher than the previous day. These funds have seen a cumulative net outflow of $405.11 million to date.

Leveraged fund attracts investor focus

Meanwhile, the U.S. Securities and Exchange Commission has recently given the green light for the launch of a new leveraged fund, MSTX, by Defiance, a U.S.-based ETF issuer. The fund aims to provide investors with 175% daily long exposure to MicroStrategy, enabling them to gain leveraged exposure to innovative companies without the need for a margin account.

On its debut trading day, MSTX generated $22 million in volume, which might set a new record, according to Bloomberg’s Senior ETF Analyst, Eric Balchunas.

Despite this development and the introduction of IBIT, another ETF, the broader crypto market has shown a tepid response. Most major cryptocurrencies have remained stable or recorded minimal increases. Bitcoin (BTC) had only gained 0.77%, while Ethereum (ETH) managed an even lower increase of 0.16%, per data from crypto.news.

Bitcoin dipped temporarily under the $57,000 mark but has since managed to climb back up to $58,442 at the time of writing. Aptos (APT) and Celestia (TIA) have taken the biggest hit among the top ten by market cap on the daily timeframe and are down 4.9% and 3.8%, respectively.

It remains to be seen if the bulls or the bears get the upper hand now, but analyst Rekt Capital noted in an Aug. 15 post on X that Bitcoin is currently retesting the bottom of its trading channel as support, indicated by a green circle on the chart. They also emphasized that maintaining price stability at this level could favorably impact the cryptocurrency’s potential for a future upward trend continuation.

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