The SEC has finally done it—given the thumbs up to the first-ever leveraged MicroStrategy crypto ETF. This lets you double down on the crazy ride that is MicroStrategy’s Bitcoin obsession.
Led by Michael Saylor, the company has become the poster child for corporate Bitcoin adoption. These guys are holding more Bitcoin than 97% of all holders.
The BitcoinStrategy
So, what does this mean for the crypto market? For starters, it’s a huge win for those who believe in the future of Bitcoin. MicroStrategy is known for its aggressive Bitcoin strategy, and this ETF cranks it up a notch.
It allows investors to gain leveraged exposure to MicroStrategy’s stock, which is basically a proxy for holding Bitcoin itself. But leveraged ETFs are not for the faint of heart. They can multiply gains, sure, but naturally, they can also magnify losses.
If Bitcoin takes a hit, this ETF will feel the pain—big time. It’s a high-risk, high-reward game, and everyone who jumps in should know the stakes.
As of the second quarter of 2024, MicroStrategy is sitting on a stash of 226,500 Bitcoins, worth around $15 billion. During Q2 alone, they added 12,222 Bitcoins to their hoard, buying each coin at an average price of $65,882.
MicroStrategy’s Financial Rollercoaster
Saylor’s obsession with Bitcoin hasn’t come without its costs. In Q2, MicroStrategy’s financials weren’t exactly rosy. The company saw its revenue drop to $111.4 million, a 7.4% decline from the previous year.
That might not seem catastrophic, but when you factor in a net loss of $102.6 million, things start to look a bit concerning.
For a company that once posted a profit of $22.2 million in the same quarter the year before, this is a massive turnaround—and not in the good sense. The loss per share came in at $5.74, compared to a profit of $1.68 per share in Q2 2023.
The market didn’t take kindly to these numbers, and the stock price tumbled by 15% in the week after the earnings report.
America’s approval of spot Bitcoin ETFs has triggered an unprecedented institutional interest in Bitcoin. And guess who’s trying to ride that wave? You got it—MicroStrategy.
The company is making itself as the go-to for institutional players wanting to get into Bitcoin without directly holding the asset. It’s a clever move, especially with more pension funds and big money players dipping their toes into crypto.
For example, South Korea’s National Pension Service bought nearly $34 million worth of MicroStrategy shares in Q2.
But let’s not get too cozy with these big numbers. MicroStrategy’s bet on Bitcoin is still risky business. Sure, it has and could pay off big time if Bitcoin soars, but if the market goes south, things could get ugly fast.
