The Defiance Daily Target 2X Long MSTR ETF (MSTX), which aims to provide twice the daily returns of MicroStrategy Inc. (MSTR), plummeted 5.03% on Tuesday, December 31st, during the intraday trading session.
The steep decline in MSTX appears to be driven by growing concerns over MicroStrategy's aggressive strategy of issuing convertible debt to purchase more Bitcoin. While the company holds a substantial portion of the total Bitcoin supply, its stock price has diverged significantly from the cryptocurrency's performance in recent weeks.
According to reports, MicroStrategy's shares have fallen around 20% in December, significantly underperforming Bitcoin's 4.34% decline during the same period. Analysts attribute this divergence to the company's continued issuance of 0% convertible notes and a proposal to increase its authorized share count by a massive 10 billion shares, raising concerns about potential dilution for existing shareholders.
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