GraniteShares to launch ETFs make the company a greater presence in the leveraged investment space, focusing on major cryptocurrency-related companies. The New York-based asset manager managing assets of more than $10 billion is also filing for several new ETFs.

These will amplify exposure to the leading stocks in the cryptocurrency sector. With this move, GraniteShares looks to cash in on growing participation in digital assets and the opportunities that open for investors.

Key-Takeaways:

• GraniteShares to launch ETFs leveraged with high-growth crypto companies including Riot, Marathon, MicroStrategy and Robinhood for amplified exposure.
• High-return leveraged ETFs are high-risk and can return high returns when in a bull market but carry high risk, especially in a downtrend. Like most investments, volatility has to be cared for.

Market Expansion in in Strategics, and Key Players

As crypto-linked investment products enjoy demand not seen before, it is decided by GraniteShares to launch ETFs. It is revealed in the filing, submitted on December 20, that this is going to be both leveraged long and short ETFs, tracking major industry players from Riot Platforms, Marathon Digital, MicroStrategy, and Robinhood.

It’s a strategic move in a market where there is a growing interest in knowing about the cryptocurrency sector among investors. These new ETFs intend to deliver amplified returns, enabling the investors to take advantage of the volatility that these prominent crypto-related companies offer.

New investment vehicles will offer 2x leverage, taking twice a day the returns on their underlying assets. For instance, if Riot Platforms’ stock jumps 1%, then GraniteShares 2x Long RIOT ETF is intended to give a 2% return.

Investors who want to get the most bang for their buck in the volatile market of crypto-related equities will find amplified exposure incredibly attractive. GraniteShares is catering to those that desire higher rewards given the sector’s fluctuations by offering leveraged ETFs.

The target companies for these ETFs are veritable players within the cryptocurrency ecosystem. Riot Platforms and Marathon Digital are the biggest Bitcoin mining operations, with Bitcoin reserves of 17,429 and 44,394 coins, respectively.

Still, MicroStrategy is the largest institutional Bitcoin holder, with 439,000 coins. Meanwhile, the company is leading the way with retail crypto and stock trading.

Performance Metrics and Risk Concerns

The timing of the decision of GraniteShares to launch ETFs in the market mirrors the success of similar products throughout the market. The move is a corporate strategy that exploits the growing investment vehicle demand in cryptocurrency.

There are already existing leveraged ETFs tracking the stocks related to crypto. And not least, the T-Rex 2x Long MSTR Daily Target fund (MSTU) and the Defiance Daily Target 2X Long MSTR ETF (MSTX) have over $1.8 billion in assets.

The strong asset flows indicate that there are more investors who are interested in crypto-related ETFs. This is proof of demand for leveraged access to the cryptosphere.

During a raging bullish market, performance metrics for leveraged ETFs have been especially strong. During a three-month period, the stocks of MicroStrategy rose 150%, the MSTU Plus funds were up 308%, and the MSTX plus fund 253%, respectively.

These leveraged ETFs, however, magnify losses as much as they amplify gains when the market is rising. Nevertheless, they are also more risk-prone in the event of market corrections, as recently demonstrated by performance data.

While the potential for higher rewards and the fund’s volatility mean investors need to be careful with their risks. On the flip side, they can lose money in bear markets—and so speaking of timing and risk management is crucial.

Potential investors should take risk considerations into account; leveraged ETFs can just as well amplify losses as they can amplify gains. And we could see that in the 30-day period that lasted just after MicroStrategy’s stock fell by 24%, both MSTU and MSTX funds suffered losses that exceeded 50%.

Other leveraged products have presented similar patterns. For instance, the ProShares UltraPro QQQ ETF suffered 79 percent losses last year, compared to just 32 percent for its underlying index.

Leveraged ETFs are particularly risky, particularly during contractionary phases in the market, and these examples emphasize them. Sharp losses, as well as likely gains, must be part of the investors’ mindset.

Conclusion

The decision of GraniteShares launch ETFs follows a growing trend of crypto investment products. YieldMax’s have covered call ETFs on crypto companies, and other firms have debuted such offerings as well. These are option strategies products that generate monthly income via premium collection from the sale of call options.

Do you want to invest in leveraged ETFs or in the context of products dedicated to cryptocurrency?