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Blockstream CEO Criticizes Defiance 2X Short MSTR ETF
On April 7, Blockstream CEO Adam Back expressed strong criticism towards the newly launched Defiance 2X Short MSTR ETF. This ETF was specifically designed to short MicroStrategy, a prominent holder of Bitcoin in the market.
Risk Factors Highlighted by Blockstream CEO
Adam Back highlighted the risks associated with shorting MicroStrategy through this ETF. He pointed out that the auto-rebalancing feature in a volatile market could pose significant challenges for investors, even if they believed MicroStrategy to be overvalued.
Back emphasized the potential pitfalls of the ETF, stating that in a scenario where MicroStrategy’s premium decreases but the price of Bitcoin doubles, investors would still face substantial losses due to the 2x short position.
Concerns Over MicroStrategy’s Bitcoin Holdings
One of the key reasons cited by Back for his skepticism towards the short ETF was MicroStrategy’s extensive Bitcoin holdings. With over 210,000 BTC valued at approximately $15.2 billion, MicroStrategy’s portfolio represents a significant portion of the total Bitcoin supply.
Given the strong correlation between MicroStrategy’s valuation and its Bitcoin investments, Back warned that the ETF’s 2x auto-rebalancing mechanism could lead to adverse outcomes for investors.
Michael Saylor’s Stance on Bitcoin
Despite mounting criticism surrounding the MSTR ETF, MicroStrategy’s CEO Michael Saylor remains steadfast in his commitment to Bitcoin. Saylor has reiterated his bullish outlook on Bitcoin, highlighting its technical superiority over other asset classes.
At a recent Bloomberg event, Saylor defended MicroStrategy’s Bitcoin acquisition strategy, emphasizing the long-term vision of the company and the belief in Bitcoin’s potential as a superior asset.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
