Surging 19%, Short Bitcoin ETF Reflects Intensifying Doubts Over MSTR’s BTC Exposure

Inverse MSTR ETF Rallies 19%, Reflecting Growing Caution Toward Bitcoin and MicroStrategy

A leveraged ETF designed to bet against MicroStrategy (MSTR) posted a sharp gain last week, reflecting a growing bearish outlook on both the software company and its extensive Bitcoin holdings.

The Defiance Daily Target 2x Short MSTR ETF (SMST) surged 19%, its strongest weekly performance since February, according to TradingView data. This marks the ETF’s third consecutive weekly gain—its first such streak since launching in August 2025.

The rally also broke through a long-term downtrend from the ETF’s September 2024 highs near $2,368, confirming a bullish breakout on a logarithmic scale. A bullish marubozu candle formed on the weekly chart, signaling strong momentum and buyer dominance, with little intra-week selling pressure.

The performance suggests increasing skepticism toward MicroStrategy, which remains the largest public holder of bitcoin, with 628,791 BTC valued at over $71 billion. Given the company’s direct correlation with BTC price movements, SMST’s gains may reflect broader concerns about the cryptocurrency’s near-term outlook.

Investor flows support this view. SMST has attracted $16.3 million in net inflows over the past six months, per VettaFi, while its bullish counterpart—tracking 2x long MSTR exposure—has seen over $275 million in outflows during the same period.

SMST is designed to deliver -2x the daily performance of MSTR, allowing traders to profit from sharp declines in MicroStrategy’s stock. Its recent breakout and strong demand highlight a growing preference for bearish exposure amid mounting market uncertainty and fading optimism in crypto-linked equities.