MicroStrategy ETF (MSTU) Enters Top 1% In Six Weeks of Launch, What’s Next?

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As a seasoned analyst with years of experience under my belt, I find myself thoroughly intrigued by the meteoric rise of MicroStrategy (MSTR) and its 2x MicroStrategy ETF (MSTU). The staggering gains in just six months are nothing short of extraordinary, making it akin to a 57,000% annual growth rate. This is reminiscent of the dot-com bubble days, where tech stocks soared to unimaginable heights before crashing back down to earth.

Remarkably, over the course of six months since its launch, the T-Rex’s 2x MicroStrategy ETF (MSTU) has experienced an astounding growth of 225%. As calculated by Bloomberg ETF Strategist Eric Balchunas, this translates to an equivalent annual growth rate of a staggering 57,000%. Lately, MicroStrategy has been generating significant attention as the MSTR stock price reached unprecedented highs and surpassed $250 levels on Monday.

MicroStrategy ETF Enters Top 1%

With over half a billion dollars in daily trades, the MicroStrategy ETF, MSTU, now ranks among the top 1% of all Exchange Traded Funds (ETFs) based on trading volumes. Furthermore, this double-leveraged ETF from MicroStrategy has exceeded $1 billion in assets under management (AUM), outperforming its original 1.75x MSTR ETF.

Eric Balchunas, an analyst at Bloomberg, pointed out that the investment vehicle MSTU appears to function similarly to a “four times the volatility of Bitcoin ETF.” He noted that over a 30-day period, its volatility reached 168%, which is significantly higher than BlackRock’s IBIT ETF, whose volatility stands at only 41%.

This product, as Balchunas highlighted, surpasses the usual limits set by U.S. regulations on Bitcoin ETFs by amplifying the already multiplied value of MicroStrategy stock. In simpler terms, he said, “By doubling $MSTR (which is essentially 2 times Bitcoin), they developed an exceptional trading instrument.” Balchunas further emphasized the distinct attractiveness of the MicroStrategy ETF MSTU.

In simpler terms, MSTU functions similarly to a Bitcoin Exchange Traded Fund (ETF), but it’s four times as volatile. Its volatility over the past 30 days is approximately 168%. On the other hand, IBIT has a volatility of about 41%.

— Eric Balchunas (@EricBalchunas) October 28, 2024

MSTR Stock Rally Is Unstoppable

Over the last month, MicroStrategy’s share price has experienced an exceptional surge, climbing an impressive 51%. This remarkable increase can be attributed to the renewed investor attention caused by the 10-for-1 stock split that took place in August, which boosted investor engagement.

Since the implementation of the Bitcoin strategy back in September 2020, MicroStrategy’s (MSTR) stock has experienced an astounding rise of 1500%. Over these years, it has functioned as a proxy investment for Bitcoin and has outperformed Bitcoin itself at various points. Moreover, MSTR surpasses tech giants such as NVIDIA in terms of total percentage returns.

For some time now, MicroStrategy has been involved in several stock sale events to gather funds for buying more Bitcoins. This move has positioned them as the largest corporate owner of Bitcoin, with an investment worth approximately $14 billion over the last few years. Furthermore, they are considering establishing a Bitcoin Bank of their own.

Michael Saylor, the executive chair of MicroStrategy, has been outlining his Bitcoin strategy to other business leaders. More recently, he approached Satya Nadella, CEO of Microsoft, to collaborate on a Bitcoin plan that could potentially generate an extra $1 trillion for Microsoft’s shareholders.

Signs of Overvaluation?

On Monday, October 28th, the price of MSTR stock surged by an extra 8.96%, reaching a record peak of $255. This upward trend coincides with the surge in gold prices, and acclaimed economist Peter Schiff has even drawn comparisons between MSTR and gold mining companies.

Schiff made an analogy by likening MicroStrategy to gold mining firms, emphasizing that while MicroStrategy doesn’t generate revenue or produce anything tangible, it has a higher market value compared to almost all other gold mining companies, with the exception of Newmont.

Steno Research analyst Mads Eberhardt noted that while MSTR investors have seen significant profits, they should exercise caution in the future. He also mentioned that as spot Bitcoin ETF options become available, there may be a shift among investors to prefer ETFs over MSTR stock ownership, given a potential gradual trend.

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2024-10-29 11:00