Inverse MicroStrategy ETF Surges 19%, Hinting at Bearish Shift in Bitcoin Sentiment
A leveraged ETF designed to short MicroStrategy (MSTR) surged 19% last week, signaling growing bearish sentiment around both the company and its massive Bitcoin exposure.
The Defiance Daily Target 2x Short MSTR ETF (SMST), which targets -2x the daily return of MSTR shares, posted its strongest weekly gain since February, per TradingView data. The move marked the third consecutive week of gains — the longest winning streak since the fund launched in August 2025.
The rally pushed SMST above a long-standing downward trendline, dating back to the September 2024 high near $2,368. Technical charts now show a bullish breakout on the log-scale weekly timeframe, highlighted by the appearance of a bullish marubozu candle, which reflects strong and sustained buying pressure.
The breakout adds weight to a shifting narrative around MicroStrategy, which remains the largest corporate holder of Bitcoin with 628,791 BTC — now worth over $71 billion. As a result, MSTR’s stock has become a high-beta proxy for Bitcoin, making SMST a popular hedge for traders with a bearish view on crypto markets.
Investor flows back the move. SMST has attracted $16.3 million in net inflows over the past six months, according to VettaFi. By contrast, its bullish counterpart — the 2x long MSTR fund — has experienced over $275 million in outflows, indicating a notable reversal in market positioning.
As the ETF breaks out of a months-long downtrend, traders are taking note of what could be a broader risk-off shift across crypto-linked equities, especially amid persistent macroeconomic headwinds and uncertainty around Bitcoin’s near-term direction.
