“Anti-MSTR Leveraged ETF Tanks, Forcing Bears to Abandon Positions.”

Defiance 2x Short MSTR ETF Sinks Again as Bears Retreat

July 15, 2025

Traders betting against MicroStrategy (MSTR) are stepping back, as the Defiance Daily Target 2x Short MSTR ETF continues its slide, marking a record low for the fourth day running.

Short ETF Hits New Lows

On Monday, the Defiance ETF, listed under ticker SMST on Nasdaq, fell 7.58% to close at $18.17, its lowest price on record, according to TradingView data. Trading was heavy, with 2.88 million shares exchanged — the fund’s second-highest daily volume ever.

This intense selling indicates capitulation among bearish investors. Such high-volume plunges to new lows often suggest traders are throwing in the towel, a sign of peak pessimism that can sometimes mark a market bottom.

Bitcoin Rally Puts Pressure on Shorts

The decline in SMST follows bitcoin’s surge past $122,000 during early Monday trading in Asia, fueling optimism across crypto-linked assets. MSTR shares gained over 3% to $456 on Monday, their highest level since November.

MicroStrategy’s stock moves closely with bitcoin’s price, given its substantial holdings. The company owns 601,550 BTC, currently valued at around $70.56 million.

Inside the Leveraged Bet

The Defiance 2x Short MSTR ETF aims for -200% of MSTR’s daily price movement, making it a leveraged instrument for bearish traders. Since launching above $2,000 last August, SMST has mostly trended downward, aside from a brief rally from $1,600 to $2,368 later that month. Despite the steep losses, the ETF has attracted $8.2 million in net inflows over the past six months, according to VettaFi.

Meanwhile, MSTR shares have surged from roughly $100 to more than $440 during the same period, buoyed by bitcoin’s strong performance.

Long ETF Sees Gains

On the flip side, the Defiance Daily Target 2x Long MSTR ETF (MSTX) climbed to nearly $50 on Monday, its highest since January 24. Trading volumes rose for the fourth consecutive session, reaching 9.2 million shares.

Still, MSTX has recorded net outflows of over $175 million in the past six months, VettaFi data shows.

Bitcoin’s recent rally is reshaping sentiment toward crypto-focused stocks like MicroStrategy. As MSTR shares climb, bearish traders are rapidly unwinding positions, leaving leveraged short ETFs like SMST deep in negative territory.