The T-Rex 2X Long MSTR Daily Target ETF (MSTU) fell 5.16% in pre-market trading on Monday, following a pullback in MicroStrategy (MSTR) stock, which it tracks with a 2x leverage factor.
The decline comes after MicroStrategy announced another massive $5.4 billion purchase of Bitcoin, raising its total reserves to $32 billion. While this move initially sent MSTR stock soaring nearly 80% last week, investors seem to be taking profits on Monday, causing a decline in the underlying stock and subsequently the leveraged MSTU ETF.
MicroStrategy's aggressive Bitcoin accumulation strategy has resulted in a close correlation between its stock price and the cryptocurrency's movements. As Bitcoin's rally cools off, MSTR and related products like MSTU could experience increased volatility and downward pressure in the near term.
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