MicroStrategy in the News: South Korea’s NPS and New ETF MSTX Fuel Bitcoin Rally

South Korea’s National Pension Scheme (NPS), one of the world’s largest pension funds, has made a surprising strategic move. The pension giant disclosed a substantial purchase of 245,000 MicroStrategy (MSTR) shares during the second quarter as per the latest 13F filing submitted to the SEC. The MSTR stock price is up 92% year to date, while most of the gains came in the first quarter of this year.

The NPS’s total outlay for MSTR shares amounts to 46 billion won, or approximately $33.7 million. This investment represents just 0.04% of the NPS’s direct U.S. stock portfolio, highlighting a strategic allocation in a high-performing asset.

Expanding Into Crypto

In the third quarter of 2023, the NPS also made headlines by acquiring a substantial 282,673 shares of coinbase coinbase - support@coinbase.com WalletCentralised Exchange (COIN), marking its entry into the cryptocurrency sector. Since then, COIN’s share price has surged from $78 to $222 by the end of the second quarter, reflecting a remarkable 3x increase. Notably, microstrategy microstrategy - Business Intelligence , known for being the largest corporate holder of Bitcoin, currently owns over 1% of the total Bitcoin supply.

New ETF on the Horizon!

Adding to the excitement, Sylvia Jablonski, CEO of Defiance ETFs, announced the SEC’s approval of MSTX, the first leveraged single-stock ETF focused on MicroStrategy. The fund, which began trading on August 15, aims to deliver 175% daily targeted exposure to MicroStrategy’s stock performance.

High-Risk, High-Reward Opportunity

MSTX offers investors a high-risk, high-reward opportunity, providing leveraged exposure to MicroStrategy’s stock and, indirectly, to Bitcoin. According to Jablonski,

“Given MicroStrategy’s inherent higher beta than Bitcoin, MSTX offers a unique opportunity for investors to maximize their leverage exposure to the Bitcoin market within an ETF wrapper.”

This ETF allows investors to gain leveraged exposure to MicroStrategy’s stock without needing a margin account, potentially amplifying both returns and risks tied to Bitcoin’s performance. However, Defiance ETFs cautions that MSTX is intended for sophisticated investors who actively manage their portfolios.

It’s a Bumpy Road Ahead

Eric Balchunas, Senior ETF Analyst at Bloomberg, recently highlighted that Defiance ETFs’ 1.75x leveraged MicroStrategy ETF ($MSTX) is poised to become one of the most volatile ETFs in the U.S. market.

Also Check Out: Crypto Regulations in South Korea 2024

With the launch of MSTX, investors now have a new avenue to gain exposure to Bitcoin, albeit with increased risk. Will it be worth it? Time will tell.