MicroStrategy (MSTR) – Do You Think Bitcoin Will Go Down? New ETF Bets Against Bitcoin Bull Michael Saylor and MicroStrategy
MicroStrategy Incorporated MSTR Executive Chairman Michael Saylor has been one of the most outspoken bulls for Bitcoin BTC/USD in recent years, a thesis that has played out at the software company he founded, which invests heavily in the leading cryptocurrency.
What happened: A new ETF from Rex Shares called Rex Short MSTR ETF will give investors the opportunity to easily short the performance of MicroStrategy and actually short the price of Bitcoin as well.
The inverse ETF bets against the performance of the stock and offers an investment opportunity for those who believe the stock will fall in value. Single-stock ETFs and inverse ETFs are generally intended for short-term trades and for experienced investors.
“If you hate Bitcoin, you can short our stock,” Saylor told Benzinga in an interview this year.
Related Link: Exclusive: Michael Saylor’s MicroStrategy Is Married to Bitcoin
The new ETF will short the stock and provide an opportunity for investors to profit down the road if the prices of MicroStrategy and Bitcoin fall.
As of June 30, 2022, MicroStrategy holds 129,699 Bitcoin, making it one of the largest holders of the leading cryptocurrency.
Why it’s important: With its heavy Bitcoin weighting, some investors have shorted MicroStrategy as a way to gain downside exposure to the leading cryptocurrency. Although there are a number of ways to buy Bitcoin, the ability to short the cryptocurrency is less widespread and more complicated for basic investors.
Betting against MicroStrategy with the new ETF could be a bet against the company’s philosophy of continued Bitcoin. Short interest in MicroStrategy has increased with falling crypto prices. Short interest in MicroStrategy is 32.8% according to Fintel at the time of writing.
“We have a simple strategy and our strategy is we just buy Bitcoin and we have Bitcoin,” Saylor told Benzinga.
Saylor said Bitcoin remains attractive as a scarce and desirable investment that people will want to buy down the road.
“We believe that the best, highest quality resource in the world is Bitcoin. Everything else in the world is inferior to Bitcoin.”
The ProShares Short Bitcoin Strategy ETF BITI launched in June, providing investors with a cost-effective way to have short exposure to Bitcoin.
Single stock ETFs have grown in popularity and registrations in 2022 with ETF companies offering inverse ETFs and also leveraged ETFs that bet on more than specific stocks.
Together with MicroStrategy, Rex shares offers inverse single-stock ETF targeting Coinbase Global Inc COIN, GameStop Corp. GME, AMC Entertainment Holdings AMC, Peloton Interactive Inc PTON, Tilray Inc TLRY, Nikola Corp NKLA, Robinhood Markets Inc HOOD, Beyond Meat Inc BIND and PENN Entertainment PEN.
Earlier this year, Direxion introduced single-share ETFs for Tesla Inc TSLA and Apple Inc AAPL.
AXS Investments launched single-share leveraged and inverse ETFs for NVIDIA Corporation NVDATesla, PayPal Holdings Inc PYPL, Nike Inc NKE and Pfizer Inc PFE.
Another ETF, originally launched by Tuttle Capital Management in November 2021 but moved to AXS in May 2022, is AXS Short Innovation Daily ETF SARKwhich offers reverse exposure to Ark Innovation ETF SHEET from Ark Invest and Cathie Wood.
BTC, MSTR Price Action: Bitcoin is trading at $19,947.37 at press time on Tuesday against a 52-week trading range of $17,708.62 to $68,789.63. The leading cryptocurrency has fallen around 8% in the past week.
MicroStrategy shares closed Tuesday at $240.23, hitting a 52-week range of $134.09 to $891.38.
Photo: ImageFlow via Shutterstock
