JPMorgan: MicroStrategy’s Leveraged ETFs Are Exerting Greater Influence on Crypto and Equity Markets
A recent report from JPMorgan (JPM) highlighted that the increasing size and inflows of leveraged MicroStrategy (MSTR) exchange-traded funds (ETFs) are playing an increasingly significant role in both the company’s stock price movements and the broader cryptocurrency market.
The bank noted that these leveraged ETFs were a key factor in amplifying MicroStrategy’s stock surge by nearly 60% in November. During the month, nearly $11 billion flowed into U.S. spot bitcoin (BTC), spot ether (ETH), and leveraged MicroStrategy ETFs combined, with $3.4 billion—about one-third—coming from the leveraged MSTR ETFs.
“The growth of MicroStrategy’s leveraged ETFs is an important development in the crypto space, particularly in supporting the company’s bitcoin acquisition strategy,” wrote analysts led by Nikolaos Panigirtzoglou.
Under Michael Saylor’s leadership, MicroStrategy spent $13 billion on bitcoin this quarter, according to the report.
The surge in these ETFs is attributed to a growing demand from investors seeking amplified exposure to bitcoin through ETFs, a route that is often unavailable to retail investors. These ETFs allow for indirect exposure to bitcoin while benefiting from MicroStrategy’s substantial bitcoin holdings. Additionally, the company’s inclusion in major indices such as the MSCI World index leads to considerable passive flows into its stock.
The report also noted that investor optimism about MicroStrategy’s long-term business plans, including its vision to become a bitcoin-centric financial institution and develop BTC-based applications, has contributed to an elevated stock price, adding a premium to the company’s valuation.
Furthermore, Benchmark analyst Mark Palmer pointed out that MicroStrategy is now eligible for inclusion in the Nasdaq-100 index.
