As an experienced analyst with a penchant for understanding market dynamics and a knack for navigating through volatility, I find the recent move by LeverageShares to be a bold step, especially for European investors. The launch of 3x Long and Short MicroStrategy exchange-traded products offers an intriguing opportunity to indirectly trade Bitcoin with a significant level of leverage.
Launch Announcement: Leverage Shares Introduces First Margin Trading ETP Linked with MicroStrategy Stock Performance
As a researcher, I’m excited to share that I’ve come across two innovative investment tools now listed on the London Stock Exchange. These are the ‘3x Long MicroStrategy Exchange-Traded Product’ (symbol: $MST3) and the ‘3x Short MicroStrategy Exchange-Traded Product’ (symbol: $MSTS). The former allows for a 3x long position in MicroStrategy, while the latter offers a 3x short position.
For investors unfamiliar with ETPs, they are financial instruments that track the performance of an asset, such as stocks — in this case, MicroStrategy’s stock.
This 3 times multiplier ETP enables investors to amplify their earnings or losses from MicroStrategy’s stock by a factor of three. Conversely, the short -3 times ETP empowers investors to generate profits when the stock price decreases, offering them triple the usual level of leverage.
LeverageShares is introducing new ETFs in Europe that are triple the value of Microstrategy, but these financial products may not resonate with Europeans as intensely as they do with Americans due to cultural differences in risk tolerance. These ETFs are expected to have around twice the volatility compared to the SPX index, making them much more risky than 3x QQQ, which is akin to a money market fund.
— Eric Balchunas (@EricBalchunas) September 26, 2024
MicroStrategy is recognized for its significant investments in Bitcoin (BTC). On September 20th, the company announced it had bought another 7,420 Bitcoins for approximately $458 million, with each Bitcoin costing around $61,750. The company also shared that they’ve earned a 5.1% return quarter-to-date and a 17.8% return since the start of the year on their Bitcoin holdings.
As of Sept. 20, their total holdings reached 252,220 Bitcoin.
Indirect Bitcoin trading
Leverage Shares’ new move provides investors with an opportunity to gain indirect exposure to Bitcoin by investing in exchange-traded products linked to MicroStrategy’s performance. In essence, this lets traders effectively multiply their cryptocurrency views, either to boost potential gains or shield against market fluctuations, as stated by Oktay Kavrak, Leverage Shares’ Director of Strategy and Communications, on the company’s social media post.
Euronext, a European stock exchange group, provides the benchmark indices for these products.
These trading instruments open up a novel avenue for European investors to tap into the unpredictable realm of cryptocurrency investment opportunities. The potential volatility of these products is significantly greater than that of traditional market indices such as the S&P 500, with leverage potentially multiplying their volatility by 18-20 times.
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2024-09-26 17:46