Stock Track | T-Rex 2X Long MSTR Daily Target ETF Soars 8.7% Pre-Market on MicroStrategy Bitcoin Leverage Concerns

Stock Track11-29

The T-Rex 2X Long MSTR Daily Target ETF (MSTU) surged 8.7% in pre-market trading on Friday, November 29, 2024, reflecting the volatility in its underlying MicroStrategy (MSTR) holdings.

MicroStrategy, the enterprise analytics software company, has captivated Wall Street's attention this year by becoming the first public company to effectively adopt Bitcoin investing as an operating model. Its stock has skyrocketed over 460% year-to-date and over 1800% in the past two years as it aggressively purchased Bitcoin using proceeds from issuing ultra-low-yield convertible notes – a strategy dubbed the "infinite money glitch" on social media.

However, a recent article warns that MicroStrategy's leverage-driven Bitcoin investing is unsustainable in the long run. The article draws parallels to the subprime mortgage crisis, arguing that while MicroStrategy has defied skeptics so far, highly leveraged scenarios like this have always eventually ended in disaster on Wall Street.

Furthermore, the article contends that MicroStrategy stock is trading at an unjustifiable premium of over 120% to the value of its Bitcoin holdings based on current prices. At a $92,754 Bitcoin price, MicroStrategy's 386,700 Bitcoin are worth $35.87 billion, yet the company has an $81.5 billion market cap, implying investors are paying over $208,000 per Bitcoin token indirectly by owning MicroStrategy shares.

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