T-Rex 2X Long MSTR Daily Target ETF

MSTU

Market cap $5.21B

Leveraged exchange‑traded funds (ETFs) linked to bitcoin hoarder Strategy are among the biggest casualties of this year's crypto slump, as falling bitcoin price battered shares of the largest corporate holder of the token.

While Bitcoin's December descent triggered an 80% collapse in Strategy Inc.'s (previously known as Microstrategy) leveraged ETFs, erasing $1.5 billion in retail savings from MSTX and MSTU. Yet MSTR stock surged 6.05% on Tuesday, highlighting a stark divergence fueled by the unforgiving math of leverage and compounding decay.

The T-Rex 2X Long MSTR Daily Target ETF (MSTU) aims to deliver 2x daily returns of MicroStrategy (MSTR), but carries significant risk. Technical signals for MSTR are bearish: declining retail interest, a recent 'death cross,' and a break below the 12-month moving average. MSTU and its peer MSTX have both underperformed MSTR significantly year-to-date due to leveraged ETF decay and market volatility.

MSTU offers 2x daily the daily performance of MSTR via options, introducing an additional layer of risk on top of a leveraged bitcoin strategy. The ETF's performance is highly sensitive to volatility and bitcoin price swings, amplifying both upside and downside moves. Holding MSTU beyond a single day can lead to substantial gains or losses due to compounding effects and value decay, especially in flat or choppy markets.

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MSTU is a 2X leveraged ETF on MSTR, which itself is a leveraged play on Bitcoin, offering high potential returns and risks. MSTU's extreme volatility, with an implied volatility of 180% and an ATR of 19%, makes it suitable only for short-term trading. MSTU has outperformed during Bitcoin bull runs but underperformed during bearish phases, emphasizing the importance of timing in leveraged funds.

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