GraniteShares files for RIOT, MARA, MSTR and HOOD ETFs

GraniteShares, a fast-growing asset manager worth over $10 billion, has filed for new crypto-linked exchange-traded funds.

On Friday, December 20, the New York-based firm filed for new leveraged ETFs to track companies like Riot Platforms, Marathon Digital, MicroStrategy, and Robinhood.

GraniteShares files for new crypto-related ETFs

Marathon Digital and Riot Platforms are the two largest Bitcoin (BTC) mining companies. They are also the third and second largest holders of Bitcoin, with 44,394 and 17,429 coins on their balance sheets.

MicroStrategy holds the most tokens with 439,000, while Robinhood serves as a major platform for crypto and stock investments.

These funds will be both 2x long and 2x short. 2x long ETFs will produce twice the daily return of the underlying stocks. For example, when shares of Riot Platform increase by 1%, the GraniteShares 2x Long RIOT ETF will also increase by 2%.

These leveraged ETFs have become extremely popular this year as cryptocurrencies and stock markets soared to record highs. Investors love them because they often generate strong returns when stocks are trending upward.

The T-Rex 2x Long MSTR Daily Target fund, codenamed MSTU, has withdrawn over $1.8 billion from assets under management. Similarly, the Defiance Daily Target 2X Long MSTR ETF, ticker symbol MSTX, has accumulated $1.8 billion in assets.

These funds have outperformed MicroStrategy over the past three months. Shares of MicroStrategy are up 150%, while shares of MSTU and MSTX are up 308% and 253% over the same period.

MSTU and MSTR and MSTX | Source: crypto.news

But the risk is that they often perform worse than the underlying stock in a bear market. MicroStrategy shares are down 24% in the last 30 days, while MSTU and MSTX are down over 50% in the same period.

The same performance has been seen among other leveraged ETFs over time. For example, the ProShares UltraPro QQQ ETF, which returns 3x the Nasdaq 100 index, has fallen 79% in 2022, with the underlying asset falling 32%. It closed Friday at $30.75, down 2.54%.

Other companies have launched other types of cryptocurrency-focused ETFs. In addition to leveraged funds, YieldMax has launched covered call ETFs in several crypto companies. Coin Option Income launched the MARA Option Income and MSTR Option Income ETFs.

These ETFs use covered call option strategies to provide monthly income to their investors. In a covered call option, the fund invests in stocks, sells the call options, and receives the premiums, which it distributes to investors monthly.