The Defiance Daily Target 2X Long MSTR ETF (MSTX) experienced a significant pre-market plunge of 6.59% on Monday. This decline can be attributed to MicroStrategy's recent announcement of acquiring a substantial amount of Bitcoin, which diverted a significant portion of its cash reserves toward the cryptocurrency purchase.
Over the past week, MicroStrategy made two major Bitcoin acquisitions. First, between October 31 and November 10, the company purchased 27,200 bitcoins for $2.03 billion. Then, in an even larger transaction between November 11 and November 17, MicroStrategy acquired an additional 51,780 bitcoins for $4.6 billion.
These massive Bitcoin purchases, totaling nearly $6.6 billion, were funded through the issuance and sale of MicroStrategy's Class A common stock under an At-the-Market (ATM) Sales Agreement. This dilution of MicroStrategy's equity likely contributed to the pre-market decline in MSTX, an ETF designed to provide leveraged exposure to MicroStrategy's stock.
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