Bears Exit as Defiance 2x Short MSTR ETF Hits Record Lows Again
July 15, 2025
Investors betting against MicroStrategy (MSTR) are retreating fast, as the Defiance Daily Target 2x Short MSTR ETF continues its downward spiral, closing at new record lows for the fourth day in a row.
Short ETF Keeps Sliding
On Monday, the Defiance ETF—trading under the ticker SMST on Nasdaq—fell 7.58% to end the day at $18.17, its lowest level ever, according to TradingView. Trading volume surged to 2.88 million shares, the fund’s second-highest on record.
Such a steep drop on high volume points to capitulation among bearish traders. When a market hits new lows alongside heavy trading, it often signals that sellers are giving up, marking extreme bearish sentiment and sometimes a market bottom.
Bitcoin Rally Drives the Pain
The plunge in SMST comes amid bitcoin’s strong rally, which saw the cryptocurrency surge past $122,000 during Monday’s Asian trading hours. That strength spilled over into MSTR shares, which rose over 3% to $456—their highest level since November.
MicroStrategy’s stock moves in close step with bitcoin’s price, given the company’s significant holdings. Currently, MicroStrategy owns 601,550 BTC, valued at roughly $70.56 million.
The Mechanics Behind SMST
The Defiance 2x Short MSTR ETF is designed to deliver -200% of the daily price movement of MSTR shares, making it a leveraged tool for traders who want to profit when MSTR falls. However, the ETF has largely declined since launching above $2,000 last August, aside from a brief spike from $1,600 to $2,368 later that same month. Despite the significant losses, SMST has attracted $8.2 million in net inflows over the past six months, according to VettaFi.
Meanwhile, MSTR’s stock has soared from around $100 to over $440 in the same timeframe, riding bitcoin’s momentum.
Long ETF on the Rise
On the other side of the trade, the Defiance Daily Target 2x Long MSTR ETF (MSTX) climbed to nearly $50 on Monday, reaching its highest price since January 24. Trading volume rose for the fourth consecutive session, hitting 9.2 million shares.
Despite this recent upward move, MSTX has seen net outflows exceeding $175 million in the past six months, VettaFi reports.
The ongoing rally in bitcoin is dramatically shifting sentiment around crypto-related stocks like MicroStrategy. As MSTR’s price climbs, traders betting against the firm are closing positions, leaving leveraged bearish ETFs like SMST deep in the red.
