REX Shares and Tuttle Capital Management Launch 2X Leveraged and Inverse ETFs for MicroStrategy

REX Shares and Tuttle Capital Management are launching the first exchange-traded funds (ETFs) to offer 200% leveraged exposure and -200% inverse exposure to the daily price movement of MicroStrategy (ticker: MSTR). The T-REX 2X Long MSTR Daily Target ETF (MSTU) and T-REX 2X Inverse MSTR Daily Target ETF (MSTZ) will trade on the Cboe BZX Exchange.

MicroStrategy, a business intelligence company, has become a proxy for bitcoin due to its substantial BTC holdings. The company acquired 18,300 BTC for approximately $1.11 billion between Aug. 6 and Sept. 12, according to an SEC filing. They now hold 244,800 BTC, valued at around $14 billion.

“Being the first-ever 2X leveraged and inverse MSTR ETFs, we’re excited to provide traders with powerful tools to engage with a company pushing the boundaries in digital assets,” said Greg King, CEO of REX Financial.

King is also the CEO of Osprey Funds, whose Osprey Bitcoin Trust (OBTC) was recently acquired by Bitwise.

Leveraged ETFs use financial derivatives and debt to amplify the daily returns of an underlying security. Traditional ETFs track their securities on a one-to-one basis, while leveraged funds may aim for a 2:1 (or higher) ratio. The launch of spot bitcoin ETFs in the U.S. earlier this year has contributed to the rise of these high-risk crypto ETFs.

Bloomberg’s senior ETF analyst Eric Balchunas mentioned that REX and Tuttle “re-broke the volatility barrier today,” highlighting that the new ETFs will deliver volatility estimated to be about 15 times that of the S&P 500.

“Hot sauce arms race in effect,” Balchunas wrote on X, echoing a sentiment shared in July.

Matt Tuttle, CEO of Tuttle Capital Management, stated, “MicroStrategy is at the forefront of one of the most transformative trends of our time. The 2X Leveraged and 2X Inverse MSTR ETFs offer traders unparalleled access to MicroStrategy’s Bitcoin exposure, whether they’re looking to amplify gains or hedge against market volatility.”

This ETF launch follows the SEC’s approval of Defiance ETFs’ MSTX, the first single-stock leveraged long ETF for MicroStrategy, which aims for 175% long daily targeted exposure. That fund has already reached $200 million in assets, according to Nate Geraci, President of ETF Store.

“We think there is a demand for it,” Tuttle stated this summer on Bloomberg TV. “There’s a whole bunch of degens out there who love to trade this stuff.”

MicroStrategy’s stock has increased by over 90% this year, trading around $131 per share at publication. Recently, the company announced plans to sell up to $700 million in senior convertible notes to fund additional bitcoin purchases and buy back debt.