How Leveraged MicroStrategy ETFs Are Powering The Bitcoin Surge

Benzinga12-06

MicroStrategy Inc's MSTR leveraged ETFs have amplified the company’s role as a de facto Bitcoin BTC/USD proxy. According to JPMorgan analyst Nikolaos Panigirtzoglou, these ETFs — Defiance Daily Target...

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This surge underscores their growing importance in facilitating Bitcoin exposure via equity markets.\nRead Also: Leveraged MicroStrategy ETFs Are Playing With Fire, Experts Warn\nRebalancing Flows Amplify Stock Volatility\nDaily rebalancing of these ETFs magnifies volatility in MicroStrategy's stock. The “price-insensitive” nature of these flows, as described by Panigirtzoglou, exacerbates market moves, particularly during end-of-day trading. \nIn November, there were five instances where rebalancing flows exceeded $2 billion in a single day. This contributed to the stock's near 60% surge during the month.\nA Premium On Bitcoin Exposure\nMicroStrategy's stock trades at a premium, reflecting factors like its inclusion in indices like MSCI World, enabling passive inflows, and its leveraged Bitcoin acquisition strategy. \nMicroStrategy “offers a way for those investors restricted from investing in spot bitcoin ETFs to gain bitcoin exposure,” Panigirtzoglou said.\nThe company also serves as an “equivalent to a leveraged bitcoin fund (given its issuance of both equity and debt to acquire bitcoins),” he added.\nWith $17 billion spent on Bitcoin in 2024, including $13 billion this quarter alone, MicroStrategy's leveraged ETFs have become a linchpin in its Bitcoin acquisition strategy, reshaping its market presence and redefining how retail investors access crypto.\nRead Next: \n\nMicroStrategy-Linked ETFs Skyrocket 400% This Year: Is This ‘The Michael Saylor Effect’?\n\nImage: Shutterstock Market News and Data brought to you by Benzinga APIs© 2024 Benzinga.com. Benzinga does not provide investment advice. 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