MSTX Doubles in 2 Months, Attracts Huge Inflows

One of the most volatile ETFs on the market is also one of the most successful new funds of 2024. The Defiance Daily Target 1.75X Long MSTR ETF (MSTX), which debuted just two months ago, already has $385 million in assets under management.

Around half of MSTX’s asset growth has come through inflows, while the other half has come through price appreciation. Since its start on Aug. 15, shares of the ETF have doubled, underscoring the quick gains that are possible with such a volatile ETF.

MicroStrategy Inc., the company that MSTX provides leveraged exposure to, has become a darling of retail investors.

Originally a software company, MicroStrategy pivoted about five years ago to focus on accumulating bitcoin, the largest cryptocurrency by market value. While the firm still sells software, the vast majority of its value comes from its massive hoard of the cryptocurrency.

The company currently owns 252,220 bitcoin, worth $17.4 billion based on the current bitcoin prices of about $69,000. 

However, MicroStrategy isn’t without controversy. While valuable, the company’s bitcoin stockpile is worth a fraction of its enterprise value of $47 billion and its market cap of $43 billion.  

IBIT, FBTC Offer More Direct Exposure

Why pay a premium for the stock of a bitcoin holding company when investors can get more direct exposure to bitcoin, without the premium, through bitcoin exchange-traded funds like the iShares Bitcoin Trust (IBIT) or the Fidelity Wise Origen Bitcoin Fund (FBTC)? Those funds have generated about $23 billion and $10 billion in inflows over the 10 months since they debuted in January. 

MicroStrategy Executive Chair Michael Saylor, has also received criticism from skeptics for his exuberant price predictions. Saylor believes that the price of one coin could reach tens of millions of dollars in the coming decades. Bitcoin set its all-time high of over $73,000 in March. 

In any case, there are plenty who believe in Saylor’s bitcoin vision and the steep ascent of MicroStrategy’s stock—which is up 235% this year—is evidence of that. 

The investors who have piled into MSTX over the past several weeks are certainly hoping that that type of performance continues.