Leveraged MicroStrategy ETF (MSTU) plummets 81% since November peak

The T-REX 2X Long MSTR Daily Target ETF (MSTU), designed to provide leveraged long exposure to MicroStrategy (MSTR) shares, has declined approximately 81% since its peak on November 20, 2024, according to The Kobeissi Letter.

The investment researcher noted a 40% value decrease in just the past three trading sessions.

Over the same period, MSTR stock itself dropped roughly 20%.

Leveraged ETFs, like MSTU, add additional risk to investments and tend to underperform due to the costs associated with daily rebalancing to maintain leverage.

These ETFs typically hold financial derivatives rather than the underlying stock.

A GSR Markets study indicated that leveraged ETFs can lag comparable strategies by more than 20% in volatile market conditions due to daily rebalances.

REX Shares and Tuttle Capital Management jointly launched MSTU and T-REX 2X Inverse MSTR Daily Target ETF (MSTZ) in September 2024, aiming for two-times leveraged long and short exposure to MSTR, respectively.

MSTU's total net assets are $1.62 billion USD with a net expense ratio of 1.05%.

The fund is non-diversified and mainly invested in US stocks (80.28%) with 73.43% allocation to the technology sector.

MicroStrategy, initially a business intelligence firm, shifted its focus to Bitcoin (CRYPTO:BTC) in 2020 under founder Michael Saylor, using its balance sheet to acquire BTC.

The company has invested upwards of $33 billion in BTC at an average cost of around $66,000 per coin.

While MSTR shares had seen a peak performance of 2500% return, as of February 26, 2025, they are down approximately 15% year-to-date, influenced by Bitcoin's recent price correction.