MicroStrategy leveraged and short ETPs debut in Europe

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Exchange Traded Products Company (ETP) Leverage Shares announced launching a MicroStrategy triple leveraged ETP and an inverse ETP on the London Stock Exchange. One of the issuer’s executives stated that the product is a way for investors to leverage their crypto exposure.

The triple leveraged ETPs, MST3 and MSTS, will be backed by MicroStrategy shares. The announcement mentioned the tech company’s investments in Bitcoin (BTC).

“While MicroStrategy is becoming a de facto proxy for Bitcoin investing, our MSTR ETPs allow traders to effectively leverage their cryptocurrency perspective,” said Oktay Kavrak, Director of Strategy and Communications at Leverage Shares.

Kavrak added that the products could also be used to hedge against market swings, calling ETPs “very liquid” and “centrally offset.”

Eric Balchunas, Bloomberg senior ETF analyst, said that the European market’s appetite for risk through leveraged products is lower compared to the US.

Furthermore, Balchunas pointed out that both products will have up to 20 times the volatility of the S&P 500. “They will make 3x QQQ look like a money mkt fund,” he added.

Notably, on the back of recent BTC purchases, the issuance of $1 billion in senior convertible notes to acquire more crypto, and the cut in US interest rates, MicroStrategy shares are up 12.6% over the past five trading days .

The technology company led by Michael Saylor now holds 252,220 BTC, which is 1.2% of the total supply of Bitcoin.

MicroStrategy ETFs as proxies

A leveraged MicroStrategy ETF debuted in the US last month, giving investors leverage of 1.75. MSTX, issued by Defiance, is the most volatile ETF traded in the country, according to Eric Balchunas.

The Bloomberg analyst also said that MicroStrategy’s ETPs that offer different modes of exposure, such as leverage and short, are likely to be added to other products. Thus, they serve as indirect exposure to Bitcoin through more sophisticated methods.

Those alternative ways to gain exposure to BTC, such as adding options to BlackRock’s spot Bitcoin ETF, are seen de Balchunas as a “huge win” as it attracts more liquidity from the “big fish”.

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