A leveraged bearish strategy ETF tied to MicroStrategy (MSTR) surged by 19% last week, casting a shadow over bitcoin’s immediate future. The ETF, known as the Defiance Daily Target 2x Short MSTR (SMST), posted its most impressive performance since February, suggesting a grim outlook for both MSTR and the broader cryptocurrency landscape. This surge marks the fund’s third consecutive weekly gain—a pattern not witnessed since its debut a year ago on Nasdaq.
Bullish Breakthrough or Bearish Omen?
The recent spike in the SMST ETF is more than just a statistical anomaly. It broke past a key bearish trendline, a remnant of the steep decline from the September 2024 highs of about $2,368 down to under $20. On a log-scale weekly candlestick chart, typically used for assets with exponential price movements, this breakout is clear. Such a move is underscored by a bullish marubozu candle—a strong indicator that buyers dominated the market, leaving bears in the dust.
Omkar Godbole, a seasoned Chartered Market Technician with CoinDesk, notes, “The presence of a bullish marubozu candle is particularly telling. It shows that the momentum has decisively shifted upwards, at least for now.” For traders, this suggests a potentially bearish outlook for MSTR and, by extension, bitcoin—considering MicroStrategy’s status as the largest publicly listed holder of bitcoin, with a staggering 628,791 BTC, valued at over $71 billion. This follows a pattern of significant acquisitions, such as Michael Saylor’s Strategy Makes Massive $2.4B Bitcoin Purchase With Preferred Stock Sale Proceeds.
Shifting Sands in the ETF Landscape
The Defiance Daily Target 2x Short MSTR ETF is designed to deliver daily investment results that are -200%, or minus 2x, the daily percentage change in MSTR’s share price. Essentially, it enables investors to profit from declines in MSTR’s stock value. Over the past six months, this bearish ETF has attracted net inflows of $16.3 million, as reported by VettaFi, while its bullish counterpart has experienced significant outflows exceeding $275 million.
According to market analyst Jane Kim, “The shift in capital flows highlights a growing sentiment of caution among investors. They’re hedging their bets in anticipation of further declines in the crypto market.” This is further compounded by ongoing fears of stagflation in the U.S., which have weighed heavily on both bitcoin and equities, causing them to bleed millions over recent weeks.
Implications for Bitcoin and Beyond
So, what does this mean for bitcoin enthusiasts and investors? The ETF’s performance could be a harbinger of tough times ahead for cryptocurrency markets. With fears of economic stagnation and inflation brewing, investors might continue to seek refuge in bearish strategies, particularly if bitcoin fails to regain its footing soon. This cautious sentiment contrasts sharply with recent bullish moves, such as Strategy buys 21K Bitcoin with 2025’s biggest public offering.
Godbole adds, “While the current indicators aren’t definitive, they certainly raise questions about the sustainability of bitcoin’s price levels in the near term. It’s a time for investors to stay vigilant and possibly reconsider their strategies.”
As we stare down the barrel of August 2025, the landscape for crypto remains as volatile as ever. The interplay between market sentiment, economic indicators, and strategic investments will be crucial in determining the path forward. With uncertainties looming large, the only certainty might just be more unpredictability.
Source
This article is based on: Leveraged Bearish Strategy ETF Surges 19%, Signals Dour Outlook for MSTR and Bitcoin
Further Reading
Deepen your understanding with these related articles:
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- Strategy Reports $10 Billion Q2 Profit, Plans to Raise $4.2 Billion to Buy More Bitcoin
- Strategy Looking to Raise $4.2B Via Preferred Stock to Stack More Bitcoin
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
