Avoid MicroStrategy stock: buy MSTU and MSTX ETFs instead

MicroStrategy stock price continued its strong rally, reaching its all-time high of $503 this week. MSTR has been one of the best-performing companies in Wall Street as it jumped by over 830% in the last 12 months, bringing its market cap to over $87 billion. 

MicroStrategy stock and Bitcoin

MSTR stock price is expected to continue rising on Thursday because of the ongoing Bitcoin price action. BTC price jumped above $97,000 for the first time ever, raising the possibility that the coin will get to $100,000 soon. 

Such a move will benefit MicroStrategy, a company that has been accumulating Bitcoins in the past few years. It has now added over 252,000 coins in its balance sheet, with a valuation of over $33 billion, a figure that is expected to continue growing. 

The main catalyst for the MicroStrategy stock is the view that Bitcoin price will continue rising in the longer term. Bitcoin has spent over 16 years to get to $100,000. Analysts believe that it will take a shorter period to get to $200,000. 

This is something that happens all the time. For example, the S&P 500 index took over five decades to rise from $44 to $1,000, which it reached in August 2010. It then spent just five years to hit $2,000. 

Similarly, the index jumped to $3,000 in 2019 for the first time ever. It has spent less than five years to hit $6,000.

The main catalyst for Bitcoin is the fact that more mainstream companies will continue allocating the coin as part of their treasuries. For example, news reports show that Michael Saylor, MicroStrategy’s founder, will talk to Microsoft’s board on how to incorporate Bitcoin in its balance sheet. 

If a big company like Microsoft does that, then other firms will follow in short order. Most of these firms may decide to either buy Bitcoin itself or spot Bitcoin ETFs, which have continued to gain traction among investors. Data shows that these coins have had a cumulative inflow of almost $30 billion. 

MSTU and MSTX are better assets

Therefore, if you strongly believe that the MicroStrategy stock price has more room to run, it makes sense to invest in MSTU and MSTX ETFs. 

The T-Rex 2X Long MSTR Daily Target (MSTU) has accumulated over $2.8 billion in assets, while the Defiance Daily Target 2X Long MSTR ETF (MSTX) has $1.8 billion in assets. 

These funds have are created to track the daily price change of the MicroStrategy stock and then magnify it by 2x. As such, if MSTR stock rises by 1%, the two funds will rise by 2% on that day.

Similarly, if the MSTR share price falls by 1%, they will fall by 2%. As such, these funds always do well when MicroStrategy shares are firing on all cylinders. 

For example, the MSTX ETF has jumped by 310% in the last 30 days, while the MSTU fund has spiked by 321% in the same period. MicroStrategy shares have soared by 122% in the same period.

Read more: MSTU vs MSTX vs MSTU: Which is the better MicroStrategy ETF?

Therefore, if you are a strong believe in Michael Saylor’s vision, then it makes sense to invest in the two funds. 

These ETFs can be compared to the ProShares UltraPro QQQ ETF (TQQQ), which provides two times the returns of the Naadaq 100 index. Over time, the fund has done much better than the Nasdaq 100 index. For example, it has risen by 1,661% in the last decade, beating the Invesco QQQ which has jumped by 370% in the same period. 

The risk, however, is when the Bitcoin price suffers a harsh reversal, as it regularly does. If this happens, the losses in MSTU and MSTX ETFs will be magnified.

The post Avoid MicroStrategy stock: buy MSTU and MSTX ETFs instead appeared first on Invezz