The T-Rex 2X Long MSTR Daily Target ETF (MSTU) plummeted 5.02% on Tuesday, significantly underperforming the broader market. The ETF's plunge was driven by the sharp sell-off in its underlying holding, MicroStrategy (MSTR), which was down 8.19% on the day.
MicroStrategy, a company that holds the largest corporate reserves of Bitcoin, has seen its stock diverge from the performance of the cryptocurrency in recent weeks. Despite Bitcoin prices declining only 4.34% month-to-date, MicroStrategy shares have fallen over 20% during the same period.
This divergence is largely attributed to MicroStrategy's recent issuance of 0% convertible notes to raise funds for purchasing more Bitcoin. While this strategy could potentially drive up Bitcoin prices, it also dilutes existing MicroStrategy shareholders. As a leveraged ETF that aims to provide 2x the daily returns of MSTR, MSTU has been disproportionately impacted by the company's underperformance relative to Bitcoin.
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