GraniteShares has officially submitted applications for new crypto-linked exchange-traded funds (ETFs) as it expands its portfolio in the fast-evolving cryptocurrency market.
On December 20, the New York-based asset manager filed for leveraged ETFs designed to track top companies in the crypto space, including Riot Platforms, Marathon Digital, MicroStrategy, and Robinhood.
GraniteShares Targets Crypto Market with New ETFs
Marathon Digital and Riot Platforms stand out as the leading Bitcoin (BTC) mining firms, holding significant quantities of the cryptocurrency on their balance sheets—44,394 and 17,429 BTC, respectively. MicroStrategy leads the pack with an impressive 439,000 BTC.
The upcoming funds will feature both 2x long and 2x short ETFs. For instance, a 2x Long RIOT ETF will double the daily return, meaning a 1% increase in Riot Platform’s stock will translate to a 2% gain in the ETF’s value.
As the crypto universe and stock markets hit record levels this year, these leveraged ETFs have gained traction among investors drawn to their potential for high returns during bullish trends.
The T-Rex 2x Long MSTR Daily Target fund (ticker: MSTU) has already garnered over $1.8 billion in assets under management, paralleling the success of the Defiance Daily Target 2X Long MSTR ETF (ticker: MSTX), which has also accumulated $1.8 billion.
In recent months, these leveraged ETFs have outperformed MicroStrategy: while MicroStrategy’s stock has increased by 150%, MSTU and MSTX have soared by 308% and 253%, respectively.
However, the inherent risk of these leveraged products comes into play during market downturns. In the last month, while MicroStrategy’s stock fell by 24%, MSTU and MSTX experienced declines exceeding 50%.
This trend is not unique to these funds—other leveraged ETFs like the ProShares UltraPro QQQ ETF, which aims for 3x returns on the Nasdaq 100 index, saw a staggering 79% drop in 2022, compared to a 32% decline in the underlying asset. The ETF closed recently at $30.75, reflecting a 2.54% decrease.
Other financial entities are also venturing into cryptocurrency-focused ETFs. YieldMax has introduced various covered call ETFs, including Coin Option Income, MARA Option Income, and MSTR Option Income ETFs, which utilize covered call strategies to generate monthly income for investors through premiums received from selling call options.
