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The newly launched leveraged exchange-traded fund (ETF) MSTX, designed for MicroStrategy shares, made headlines on its opening day by attracting record inflows. MSTX offers exposure to 1.75 times the daily returns of MicroStrategy shares.
Leveraged Funds Climb the 2024 ETF Rankings
A month later, the MSTU ETF, which provides 2 times leverage, reached $72 million in assets under management within a week of its launch. Both ETFs exhibit strong liquidity, with MSTX now ranking in the top 8% of ETFs for managed assets in 2024, reaching $357 million.
Bitcoin Tests the $60,000 Level
Meanwhile, MSTU achieved a trading volume of $40 million on a significant trading day, pushing it into the top 1% of 2024 launches and surpassing $100 million in managed assets.
Eric Balchunas, a senior ETF analyst at Bloomberg, noted that the initial performance of MSTX and MSTU has exceeded expectations. The rapid growth of MSTU indicates strong interest from investors in such leveraged products.
This scenario defies the physical constraints that would normally apply to leveraged MSTR ETF (MSTX), indicating that issuers will continue to push the volatility envelope.
On the other hand, the underlying cryptocurrency, Bitcoin 
$106,982, is struggling to maintain momentum. Although it has risen by 122% this year, it gained only 3% in the past month.
Bitcoin reached a local high of $66,367 on September 28 but has since dropped nearly 10% and is currently trading around $61,000.
The $40 million volume achieved by MSTU on its latest trading day has positioned the fund in the top 1% tier. This rapid growth reflects investors’ interest in leveraged products with high return expectations.
As the popularity of such financial instruments increases in the ETF market, factors like liquidity and volatility significantly influence investor decisions. Despite the potential high returns from leveraged ETFs, careful risk assessment is essential.
The success of leveraged ETFs indicates sustained demand for these products in the market and investors’ pursuit of higher returns in volatile environments. However, it’s crucial to remember that these funds carry risks proportional to their potential for returns.
Finally, it is advisable for investors to conduct thorough research and consider their risk tolerance before investing in leveraged products. This approach enables more informed investment decisions, acknowledging potential gains and losses.
