The Defiance Daily Target 2X Long RIOT ETF (NYSE:RIOX), launched to double the daily returns of Bitcoin mining company Riot Platforms Inc. (NASDAQ:RIOT), has lost its value by as much as 73% in the three months.
The fund only started trading on Jan. 2.
This sharp fall highlights the high risks involved with leveraged ETFs, especially those that deal with the highly volatile cryptocurrency market.
RIOX attempted to offer its investors double the percentage change in the stock price of crypto miner Riot Platforms.
The ETF has since suffered huge losses following a sudden drop in Riot’s stock price.
Also Read: Bitcoin Miners Ride The BTC Boom, But Costs Tell A Different Story: JPMorgan Analyst
What’s To Blame?
The ETF’s investment strategy, using a 2x daily leverage on Riot stock, is one of the key reasons for its sharp fall. Leverage increases not only daily …
