Bitcoin and MSTR ETFs Face Dour Outlook as Leveraged Short ETF Surges 19%.

The Defiance Daily Target 2x Short MSTR ETF surged 19% last week, piercing a bearish trendline and indicating a potential bearish outlook for bitcoin and MSTR. The ETF, which seeks to deliver daily results that are -200% the daily percentage change in MSTR share price, has seen a net inflow of $16.3 million in the past six months. Its bullish peer, the 2x long MSTR fund, has seen net outflows of over $275 million.

The Defiance Daily Target 2x Short MSTR ETF, listed under the ticker SMST on Nasdaq, surged 19% last week, marking its best performance since late February. This significant gain came as the ETF pierced a bearish trendline, suggesting a potential bearish outlook for both Bitcoin (BTC) and MicroStrategy (MSTR) [1].

The 19% surge, which was the third consecutive weekly gain since the ETF's debut in August 2024, was supported by a powerful bullish signal in the form of a bullish marubozu candle. This type of candle, characterized by a prominent green body and little-to-no wicks (shadows), indicates that buyers were in firm control and momentum is now decisively upward [1].

The Defiance Daily Target 2x Short MSTR ETF seeks to deliver daily investment results that are -200%, or minus 2x, the daily percentage change in the MSTR share price. The fund represents a bearish leveraged bet on MSTR. Despite the recent surge, the ETF has seen a net inflow of $16.3 million in the past six months, according to data source VettaFi. Meanwhile, its bullish peer, the 2x long MSTR fund (SMST), has seen net outflows of over $275 million [1].

The surge in the Defiance Daily Target 2x Short MSTR ETF comes at a time when MicroStrategy's stock has been volatile. The company reported record-breaking Q2 earnings, but its stock still tumbled 12% due to Bitcoin volatility and profit-taking [4]. This volatility may have contributed to the ETF's recent performance.

In summary, the Defiance Daily Target 2x Short MSTR ETF's surge last week, along with its bullish marubozu candle, indicates a potential bearish outlook for both Bitcoin and MicroStrategy. The ETF's net inflow and its bullish peer's outflows suggest that investors are positioning themselves for a potential downturn in the market.

References:
[1] https://finance.yahoo.com/news/leveraged-bearish-strategy-etf-surges-074851326.html
[2] https://www.coindesk.com/markets/2025/08/06/leveraged-bearish-strategy-etf-surges-19-signals-dour-outlook-for-mstr-and-bitcoin
[3] https://www.etf.com/sections/weekly-etf-flows/25b-added-etf-assets-last-week-despite-friday-selloff
[4] https://www.fxleaders.com/news/2025/08/03/microstrategys-record-earnings-overshadowed-by-12-mstr-stock-slide/