T-Rex Group Files to Launch the Most Volatile ETF Ever, Targeting 2x MicroStrategy $MSTR Daily Gains or Losses

Toward the end of June, the T-Rex Group filed an application with the SEC to launch the T-Rex 2X Long Daily Target ETF, which will aim to magnify MicroStrategy's daily gains or losses - mostly a function of Bitcoin's price action - by 200 percent.

The T-Rex Group has just filed an application with the Securities and Exchange Commission (SEC) to launch a new exchange-traded fund (ETF) that will offer investors double-leveraged exposure to MicroStrategy's holdings of Bitcoin.

The ETF, which is set to be called the T-Rex 2X Long MSTR Daily Target ETF, will aim to magnify MicroStrategy's daily gains or losses - mostly a function of Bitcoin's price action - by 200 percent.

As a result of this high leverage, the ETF is expected to be one of the most volatile investment vehicles in the United States, with the potential for investors to lose their entire principal if MSTR's stock price falls by more than 50 percent in a single day.

The ETF will be linked to the daily performance of MicroStrategy's Class A common stock, which trades on the Nasdaq under the ticker symbol "MSTR." As of Friday, June 26, MSTR shares closed at $212.84, down by 1.34 percent for the day. Year-to-date, the stock has risen by 56.89 percent.

MicroStrategy is a data analytics company that has become famous for its leveraged holdings of Bitcoin. In fact, the MSTR stock now trades as a levered bet on Bitcoin itself.

As a result of MicroStrategy's outsized exposure to Bitcoin, which is known for its extreme price volatility, MSTR stock itself is highly volatile. This characteristic makes it unsuitable for most investors, especially those who are risk-averse or have a low tolerance for volatility. However, it could prove to be an attractive investment for adrenaline junkies who are looking for a high-risk, high-reward investment.

According to Eric Balchunas, a senior ETF analyst at Bloomberg, the T-Rex 2X Long MSTR Daily Target ETF is expected to be the most volatile ETF in the US by far, and will likely be in the neighborhood of 20x the volatility of the Standard & Poor's 500 Index. Balchunas also compared the ETF to the "ghost pepper of ETF hot sauce."

The T-Rex Group, which is known for its 2X Long ETFs, filed for the first-ever 2x Microstrategy $MSTR ETFs. These ETFs are set to be the most volatile to ever hit the US market, at about 20x the volatility of the Standard & Poor's 500 Index.

The company's application to the SEC states that the T-Rex 2X Long MSTR Daily Target ETF "is designed to achieve double (200%) the daily performance of the MSTR Trust, before fees and expenses." The ETF will invest at least 80 percent of its net assets in shares of the MSTR Trust, which is created by Northern Trust to track the performance of MSTR shares.

The remaining assets of the ETF will be invested in cash, cash equivalents, derivative instruments, and other assets that are approved by the SEC. The ETF will also incur management fees at a rate of 0.95 percent per year.

The SEC has up to 75 days to approve or disapprove the T-Rex 2X Long MSTR Daily Target ETF. However, the SEC can also extend this review period by an additional 240 days. If the SEC does not take any action within this time frame, the ETF will be automatically approved.

This news comes at a time when Bitcoin has seen several days of choppy trading, largely due to the impending closure of the long-running Mt. Gox exchange saga.

The exchange, which filed for bankruptcy in 2014 following a devastating hack that resulted in a loss of around 850,000 BTC, had announced earlier this year that its creditors would be able to choose to receive their compensation in either Bitcoin or Bitcoin Cash by the 31st of October, 2024.

As part of this agreement, five major crypto exchanges, including Bitstamp, were tasked with distributing a specific proportion of the overall BTC- and BCH-denominated compensation.

Meanwhile, on another front, the German government recently sold 5,000 Bitcoins from its stash of around 50,000 BTC that were seized during a raid on the pirated content website Movie2K.

On a longer time frame, however, Bitcoin still remains in an uptrend. According to data from Glassnode, Bitcoin holders' current unrealized profit per coin is 8.2x larger than the corresponding unrealized loss per coin.

According to Glassnode, "only 18% of trading days have recorded a larger relative value, all of which are within Euphoric bull market regimes."

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