Bitcoin euphoria threatens to break these ETFs
Live MintInvestors have flocked to a pair of turbocharged exchange-traded funds to ride the momentum in bitcoin, but they contain hidden risks that aren’t widely understood. The Defiance Daily Target 2X Long MSTR ETF and the T-Rex 2X Long MSTR Daily Target ETF were designed for investors who want to place an even more aggressive bet on the stock. Photo: Kevin Sikorsky The managers of the MicroStrategy funds say they might be struggling to hit the 2x targets because their prime brokers—firms that provide securities lending and other services to professional investors—have reached the limit of the swap exposure they are willing to offer. Matt Tuttle, who runs the Tuttle Capital and Rex Shares 2x long MicroStrategy fund, said he can’t get anywhere close to the amount of swaps he needs for his booming fund. Both Tuttle and Sylvia Jablonski, the chief executive of competitor Defiance ETFs, said they are turning to the options market instead to achieve leveraged outcomes for their MicroStrategy funds.
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