The Risks of Investing in T-Rex’s 2x Long MSTR Daily Target ETF

The T-Rex Group, a financial services company, recently filed for a 2x leveraged MicroStrategy (MSTR) exchange-traded fund (ETF) in the United States. This ETF is being touted as potentially the most volatile ETF in the country. If approved, the fund, named ‘T-Rex 2X Long MSTR Daily Target ETF,’ aims to amplify the daily performance of MicroStrategy’s publicly traded common stock by 200%.

Bloomberg’s Senior ETF analyst, Eric Balchunas, pointed out that this new ETF could exhibit levels of fluctuation up to 20 times greater than the S&P 500, making it incredibly volatile. He compared the volatility of this ETF to a 3x leveraged MicroStrategy ETF available in Europe, which already experiences significant fluctuations. In comparison, the QQQ, an index tracking the top publicly traded companies in the US, appears stable like a money market fund.

The extreme volatility of T-Rex’s 2x Long MSTR Daily Target ETF has earned it the nickname of the “ghost pepper of ETFs.” The comparison to the spiciest chili pepper is a warning sign for investors, signaling that this ETF carries a high level of risk. The unpredictability and potential for massive swings in value make this fund unsuitable for the faint-hearted or risk-averse investors.

MicroStrategy, founded in 1989 by Michael Saylor, has become the largest publicly traded holder of Bitcoin. With 214,400 BTC valued at $13.2 billion on its balance sheet, the company has ventured into the realm of cryptocurrency with significant holdings. On the other hand, T-Rex has also filed for six leveraged inverse Bitcoin ETFs with 1.5x-2x leverage, further diversifying its ETF offerings.

While the T-Rex 2x Long MSTR Daily Target ETF may offer the potential for amplified returns, investors must be wary of the extreme volatility and risks associated with this financial instrument. Before considering investing in this ETF, it is crucial to thoroughly research and understand the implications of such high levels of leverage and unpredictability. As with any investment, diversification and risk management are key components of a successful investment strategy.