Bitcoin Stockpiler ETFs Plummet 50% Amidst Crypto Crash and Tariff Fears

Two leveraged exchange-traded funds (ETFs) tied to the bitcoin stockpiler strategy, MSTX and MTSU, have experienced a significant decline in their share prices over the past five days. As of Tuesday, these ETFs had dropped by nearly 50% from their peak levels last week. MSTX, which traded above $43 per share, fell to $23.83, while MTSU, trading above $9 per share, plummeted to $4.94.

The sharp decline in these ETFs can be attributed to the recent drop in the price of bitcoin (BTC), which fell below $87,000 on Tuesday. This marked BTC's lowest price since November 2020. The broader equity markets have also been affected by a widespread selloff, following U.S. President Donald Trump's announcement of impending tariffs on Canada and Mexico.

Leveraged ETFs employ derivatives and debt to amplify the potential returns of the underlying asset they track. While these financial instruments offer the possibility of higher returns, they also carry increased risk. The bitcoin stockpiler strategy, previously known as MicroStrategy, has seen its shares decline by nearly 10% to around $255 per share on Tuesday. The company, which owns nearly 500,000 bitcoins, typically trades at a premium to the price of BTC.

Geoffrey Kendrick, Global Head of Digital Assets Research at Standard Chartered, attributed the recent downturn in the digital asset sector to the risk-off sentiment prevailing in traditional markets. This sentiment has likely contributed to the decline in both bitcoin's price and the leveraged ETFs tied to the bitcoin stockpiler strategy.