Bitcoin Bets Go Into Overdrive As MSTR, Leveraged ETFs Surge

Strategy Inc. (NASDAQ:MSTR) has gained nearly 29% over the past five trading days, and the rally has been even more dramatic in the leveraged ETFs tied to the Bitcoin treasury company.

The T-Rex 2X Long MSTR Daily Target ETF (BATS:MSTU), GraniteShares 2x Long MSTR Daily ETF (NASDAQ:MSTP) and Defiance Daily Target 2X Long MSTR ETF (NASDAQ:MSTX) have each surged roughly 60% over the same five-day period, according to market data.

The gains have come despite a sharp pullback Wednesday, when MSTR fell 3.07% to $162.20 after closing at $167.33 on Tuesday. Bitcoin also slipped, trading around $84,383 on Wednesday versus $86,172 a day earlier.

That one-day reversal offers a glimpse into why these ETFs have become such powerful momentum vehicles.

Wednesday Shows the Leverage Effect

MSTU, MSTP and MSTX are designed to magnify MSTR’s daily moves, although their leverage levels differ.

MSTU and MSTP target about 2X MSTR’s daily performance, meaning a 3% decline in MSTR can translate into roughly a 6% decline in the ETF before fees and tracking effects.

MSTX uses a different leverage target, but Wednesday produced the same broad effect: a significantly larger percentage move than MSTR.

That distinction is important because these funds seek leveraged daily returns. Compounding and MSTR’s path affect their five-day performance, so investors should not assume that holding a 2X ETF for five days will produce exactly twice MSTR’s five-day return.