The elevated measurement of leveraged MicroStrategy (MSTR) exchange-traded funds (ETFs) and the flows they appeal to are having a extra pronounced impact on the corporate’s inventory and crypto markets than earlier than, JPMorgan (JPM) stated in a analysis report on Wednesday.
These ETFs performed a big function in amplifying the inventory’s near-60% rise in November, the financial institution stated.
November noticed a report of virtually $11 billion movement into U.S. spot bitcoin (BTC), spot ether (ETH) and leveraged MicroStrategy ETFs mixed, the report stated, with the leveraged MSTR ETFs accounting for $3.4 billion, or virtually a 3rd, of the full.
“This highlights the rising influence of MicroStrategy’s leveraged ETFs in crypto markets through facilitating MicroStrategy’s bitcoin buy program,” analysts led by Nikolaos Panigirtzoglou wrote.
The corporate based by Michael Saylor has spent $13 billion shopping for bitcoin this quarter alone, the report famous.
“The expansion in these ETFs is fuelled by rising investor demand in acquiring amplified publicity to bitcoin by means of an ETF wrapper,” the authors wrote, including that this is able to not usually be out there to retail traders.
MicroStrategy shares enable traders who’re restricted from investing in spot bitcoin ETFs to acquire publicity to the world’s largest cryptocurrency, and as a result of software program firm’s inclusion in benchmarks such because the MSCI World index, the inventory advantages from sizable passive flows.
The corporate’s share value additionally displays investor optimism concerning the potential profitability of MicroStrategy’s company technique, together with its plans to develop into a bitcoin financial institution and develop BTC purposes, and this provides a premium to the agency’s valuation, the report added.
MicroStrategy at the moment meets the eligibility standards for inclusion within the Nasdaq-100 index, in keeping with Benchmark analyst Mark Palmer.