Coin World News reported on Thursday that investors seeking leveraged exposure to Bitcoin prices may purchase some spicy TradFi products after the Tyrannosaurus Group applied for several MicroStrategy ETFs. Leveraged fund issuers of tech giants such as Tesla and Nvidia claim that this software company, which is eager for Bitcoin, is the next one. According to documents submitted to the Securities and Exchange Commission (SEC), Tyrannosaurus has submitted applications for two ETFs, one of which will bring a 2x long-term performance to MicroStrategy’s stock, and also submitted a related reverse option.
For some, the tricky issues related to digital assets may already be too tricky. According to Eric Balchunas, an ETF analyst at Bloomberg, the ETF proposed by Tyrannosaurus is positioned at the sharp end of the Scoville index, which is used to measure chili strength.
He wrote on Twitter (aka X): “This is almost the most volatile ETF in U.S. history.” He described this set of products as “ghost peppers in ETF hot sauce.”
As MicroStrategy leverages debt and equity to acquire more Bitcoin, the company has been seen as a leveraged game for Bitcoin. MicroStrategy did not simply treat Bitcoin as an investment tool, such as a spot Bitcoin ETF, but used tools to accumulate assets.
Earlier this month, MicroStrategy announced plans to issue $700 million in unsecured senior convertible notes to increase its massive Bitcoin reserves. After the acquisition, the company eventually increased its holdings to 226,331 BTC, worth approximately $13.8 billion at the time of writing. In the cryptocurrency field, the company has become the largest corporate holder of Bitcoin.
Balchunas previously compared spot Bitcoin ETFs to hot sauce, indicating that having a small exposure in the portfolios of ordinary investors is a good way. In April, when talking about spot Bitcoin exchanges, he wrote that most people “will just add a little bit.”
Since MicroStrategy started buying Bitcoin like crazy, the company has sometimes faced significant price fluctuations. According to data from market Chameleon, its largest single-day drop occurred in May 2022, plummeting 25% under the influence of the cryptocurrency market.
That being said, MicroStrategy’s stock price has soared 109% year-to-date, reaching $1,433, thanks to the approval of the spot Bitcoin ETF, which provided investors with more exposure options in January. Previously, MicroStrategy was seen as a popular proxy bet for Bitcoin on Wall Street.
Edited by Andrew Hayward