ETFs to Capitalize on MicroStrategy Bitcoin-Fueled Stock Rise

While MicroStrategy (NASDAQ: MSTR) may not be immediately recognizable to individuals, the firm is gaining popularity among investors, given Bitcoin's surge in price. MicroStrategy is an enterprise business intelligence (BI) software vendor founded in 1989 by Michael J. Saylor. It offers a comprehensive data analysis, visualization, and reporting platform, enabling organizations to make data-driven decisions. Key features include interactive dashboards, data integration, and predictive analytics. MicroStrategy can be deployed on-premises or in the cloud and supports various data sources. The platform is designed to be user-friendly, allowing both technical and non-technical users to leverage its capabilities effectively.

MicroStrategy and Its Bitcoin Association

In 2020, MicroStrategy began buying Bitcoin, as its CEO, Michael Saylor, believed it was superior to cash. It initiated a position of 21,454 Bitcoins for $250 million. While the firm has grown its position over time, it currently owns 386,700 bitcoins. At current prices, the holdings are worth roughly $36.8 billion.

MicroStrategy's Bitcoin ownership has been quite beneficial for the company and the underlying reason for the firm's exponential growth in market valuation, which was $91 billion as of November 25th, 2024. Seeking to capitalize on the current enthusiasm around cryptocurrencies, MicroStrategy recently increased its convertible-bond offering to $2.6 billion from an originally planned $1.75 billion; the proceeds from the bond offering will be used to acquire more Bitcoin.

MicroStrategy: A Proxy For Bitcoin's Performance

MicroStrategy's stock does not reflect the firm's actual business operations but has become a proxy for Bitcoin's performance. For investors, particularly in the U.S., ETF solutions such as YieldMax MSTR Option IncomeStrategy ETF (Ticker: MSTY), Defiance Daily Target 2x Long MSTR ETF (Ticker: MSTX), and Defiance Daily Target 2x Short MSTR ETF (Ticker: SMST) grown in popularity, as they facilitate access to the company in a single-ticket solution. These single-stock ETFs have a distinct value proposition and, in some instances, are not meant for prolonged use – but are intended to capitalize on directional changes in the underlying asset.

For MSTY, the fund seeks to generate monthly income by selling call options on MicroStrategy's stock. This strategy targets high yields but limits potential upside, making it less ideal for strongly bullish markets where the stock may be called away at the strike price. Conversely, MSTX and SMST are leveraged ETFs designed to follow MicroStrategy's daily performance, enabling investors to amplify their exposure to the firm's equity movements.

Canadian ETFs With Exposure to MicroStrategy

The surge in Bitcoin's price has quipped the interest of many individuals. While there are ETFs with a pure-play Bitcoin focus, ETFs that have exposure to MicroStrategy and the broader cryptocurrency ecosystem are an alternative pathway by which investors can participate in the digital asset's upswing at this juncture.

By utilizing Trackinsight's ETF Screener, investors can identify the Canadian ETFs that provide exposure to MicroStrategy. In using the platform, the following Canadian ETFs have been identified:

Evolve Future Leadership Fund ETF (Tickers: LEAD/LEAD.B/LEAD.U) is an actively managed ETF that invests in a diversified portfolio of leading global companies across various sectors where clear trends are driving future growth. With the added value of a covered call strategy applied to up to 33% of the portfolio, the covered call options have the potential to provide extra income and help hedge long stock positions.

As of November 21, 2024, MicroStrategy has an 11.90% allocation in the fund.

CI Galaxy Blockchain ETF (Ticker: CBCX)seeks to replicate the performance of the Alerian Galaxy Global Cryptocurrency-Focused Blockchain Equity Hedged to CAD Dollars Index. The index intends to track the performance of companies engaged in the development of blockchain technologies and businesses operating and developing the blockchain ecosystem.

As of October 2024, MicroStrategy has a 7.13% allocation in the fund.

BMO Global Innovators Fund Active ETF (Ticker: BGIN)provides exposure to a portfolio of the most innovative global companies across sectors and market capitalizations. Using a thematic, top-down process to screen for companies involved in the development of innovative products, processes or services that will shape the next decade involved in artificial intelligence, biotechnology, semiconductors and automation.

As of October 2024, MicroStrategy has a 3.84% allocation in the fund.

Global X Industry 4.0 Index ETF (Ticker: FOUR)seeks to replicate the performance of the Solactive Industry 4.0 Index, net of expenses. The Solactive Industry 4.0 Index is designed to provide exposure to the performance of equity securities of companies involved in transforming manufacturing and the industrial market through the development or implementation of new technologies and innovations. FOUR seeks to hedge the U.S. dollar value of its portfolio to the Canadian dollar at all times.

As of November 22, 2024, MicroStrategy has a 2.54% allocation in the fund.

Evolve Cloud Computing Index ETF (Ticker: DATA/DATA.B) seeks to replicate the performance of the Solactive Global Cloud Computing Index Canadian Dollar Hedged, or any successor thereto. DATA invests primarily in equity securities of companies located domestically or internationally that have business operations in the field of cloud computing.

As of November 21, 2024, MicroStrategy has a 2.64% allocation in the fund.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.