GraniteShares Crypto ETFs Target Riot, Marathon, and MicroStrategy in New Filing

GraniteShares, a leading asset manager with over $10 billion in assets under management, has taken a decisive step in expanding its crypto-linked offerings. On December 20, the New York-based firm filed with the U.S. Securities and Exchange Commission (SEC) for a suite of leveraged exchange-traded funds (ETFs) that aim to track some of the most prominent names in the cryptocurrency and technology sectors, including Riot Platforms, Marathon Digital, MicroStrategy, and Robinhood.

This move reflects the growing demand for innovative financial products catering to crypto-savvy investors, with the new GraniteShares Crypto ETFs promising enhanced exposure to the fast-evolving digital asset landscape.

What Are GraniteShares Crypto ETFs?

GraniteShares’ proposed ETFs will provide both 2x long and 2x short exposure to their underlying assets. This means that the ETFs aim to amplify daily returns—doubling the gains or losses of the underlying stocks. For instance, if Riot Platforms’ stock rises by 1%, the GraniteShares 2x Long RIOT ETF would gain 2%. Conversely, the 2x short ETFs would generate gains when the underlying stocks decline.

This dual-option structure allows investors to bet on both upward and downward price movements, giving them flexibility in volatile markets. According to GraniteShares, these ETFs will target high-performing crypto-related stocks such as:

Riot Platforms One of the largest Bitcoin mining companies, holding 17,429 BTC on its balance sheet.
Marathon Digital Another crypto mining powerhouse with 44,394 BTC, making it the third-largest Bitcoin holder globally.
MicroStrategy Known as the corporate leader in Bitcoin holdings, with 439,000 BTC, thanks to its aggressive acquisition strategy led by Executive Chairman Michael Saylor.
Robinhood A major trading platform popular among retail investors for its stock and crypto offerings.

Why GraniteShares Crypto ETFs Matter

The filing underscores a growing trend among asset managers to capitalize on the increasing institutional and retail interest in cryptocurrency-related assets. Will Rhind, CEO of GraniteShares, stated in an earlier interview, “Our mission has always been to democratize access to innovative investment strategies, and these leveraged ETFs align perfectly with that goal.”

The timing is strategic. Leveraged ETFs have surged in popularity this year as the crypto market rebounded and tech stocks reached new highs. These products appeal to risk-tolerant investors seeking amplified returns in bullish markets.

A Double-Edged Sword

While leveraged ETFs offer potentially higher rewards, they come with heightened risks. For instance, MicroStrategy’s stock surged 150% over the past three months, yet its leveraged counterparts—such as the T-Rex 2x Long MSTR Daily Target ETF (MSTU) and Defiance Daily Target 2X Long MSTR ETF (MSTX)—outperformed significantly, gaining 308% and 253%, respectively.

However, these ETFs can dramatically underperform in bearish conditions. In the last 30 days, MicroStrategy’s stock dropped 24%, while MSTU and MSTX fell over 50%. This pattern is consistent with other leveraged ETFs, such as the ProShares UltraPro QQQ ETF, which lost 79% in 2022 during a Nasdaq downturn of 32%.

According to financial analyst Dan Ives, “Leveraged ETFs are like a double-edged sword. They’re brilliant tools in a bull market but require caution during downturns. GraniteShares’ Crypto ETFs will likely see significant interest but must be marketed with clear risk disclosures.”

Broader Crypto ETF Trends

GraniteShares is not the only player expanding its crypto ETF offerings. Companies like YieldMax have introduced covered call ETFs on crypto stocks, such as the Coin Option Income, MARA Option Income, and MSTR Option Income ETFs. These funds generate monthly income by selling call options on their underlying assets, offering a different value proposition compared to leveraged ETFs.

The rise of these innovative financial instruments reflects a maturing market where investors seek diversified ways to gain crypto exposure.

Addressing Regulatory Challenges

GraniteShares Crypto ETFs also highlight ongoing regulatory debates around cryptocurrency-related financial products. While the SEC has recently shown openness to spot Bitcoin ETFs, with firms like BlackRock and Fidelity leading the charge, leveraged and derivative-based ETFs face their own scrutiny due to inherent risks.

“The filing for these ETFs is yet another sign that the market is evolving quickly,” noted Laura Shin, host of the *Unchained Podcast.* “But as regulators work to strike a balance between innovation and investor protection, companies like GraniteShares must ensure their products are transparent and robust.”

What’s Next for GraniteShares?

GraniteShares’ filing is only the first step in a longer approval process. If the SEC greenlights the GraniteShares Crypto ETFs, they could set a precedent for other firms to launch similar products, further diversifying the crypto investment landscape.

Given the market’s appetite for sophisticated investment tools, these ETFs are likely to attract substantial interest from both retail and institutional investors.

The GraniteShares Crypto ETFs represent a bold move in the ongoing fusion of traditional finance and cryptocurrency. As the industry continues to evolve, these products could redefine how investors approach crypto-related assets, offering both opportunity and risk in equal measure.

As GraniteShares awaits regulatory approval, the spotlight remains on how these innovative ETFs will perform in a market that is as dynamic as it is unpredictable.

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