Stock Track | Defiance Daily Target 2X Long MSTR ETF Plummets 5.09% on Overvaluation Concerns and Tracking Issues

Stock Track12-04

The Defiance Daily Target 2X Long MSTR ETF (MSTX), an exchange-traded fund designed to provide leveraged exposure to MicroStrategy's stock price, experienced a significant plummet of 5.09% on Tuesday during the intraday trading session.

This sharp decline appears to be driven by mounting concerns over MicroStrategy's aggressive Bitcoin acquisition strategy and the potential overvaluation of its stock price compared to the actual value of its Bitcoin holdings. Over the past several weeks, MicroStrategy has made multi-billion dollar Bitcoin purchases, funded by issuing new shares under an ATM Sales Agreement. As of November 17th, the company held a staggering 331,200 Bitcoins worth over $38 billion at current prices, yet its market capitalization has ballooned to nearly $90 billion, more than twice the value of its Bitcoin holdings.

Additionally, reports have surfaced that the MSTX ETF, designed to provide 2x leveraged exposure to MicroStrategy's stock price, has struggled to accurately track its intended return target. This tracking discrepancy appears to have added to the selling pressure on the fund, as investors questioned its reliability as a trading tool. The combination of overvaluation concerns surrounding MicroStrategy's stock and the tracking issues with the MSTX ETF have contributed to the significant plummet in the ETF's price during Tuesday's intraday trading session.

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