Bears Surrender as Defiance 2x Short MSTR ETF Hits Record Lows Again

15 July 2025

Traders betting against MicroStrategy (MSTR) appear to be throwing in the towel, as the Defiance Daily Target 2x Short MSTR ETF plummeted to fresh lows for the fourth day in a row.

Persistent Slide for Bearish ETF

On Monday, the U.S.-listed ETF — trading under the ticker SMST on Nasdaq — dropped 7.58% to close at $18.17, marking its lowest price ever, according to data from TradingView. The session saw a significant 2.88 million shares change hands, the fund’s second-highest trading volume on record.

The heavy selling underscores a capitulation among bearish traders who had been wagering against MSTR, the prominent corporate holder of bitcoin. Such high-volume drops to new lows often signal peak pessimism in a market and can sometimes mark a bottom, as traders abandon hopes of a rebound.

Bitcoin Rally Fuels the Pain

The collapse in SMST comes amid a powerful surge in bitcoin’s price, which hit record highs above $122,000 during Monday’s Asian trading hours. This bullish momentum carried over to MSTR stock, which jumped more than 3% to $456, its highest level since November.

The rising price of bitcoin has been a major tailwind for MicroStrategy, whose balance sheet includes substantial bitcoin holdings. As of writing, the company owns 601,550 BTC, valued around $70.56 million.

Inside the Leveraged Short Bet

The Defiance 2x Short MSTR ETF aims to deliver -200% of the daily percentage change in MSTR’s share price, making it a leveraged bearish bet. However, the fund has been in a steady downtrend, aside from a brief rally last August when it climbed from $1,600 to $2,368. Since its launch last year, SMST has tumbled from over $2,000 to under $20. Despite this drop, the ETF has seen net inflows of $8.2 million over the past six months, per data from VettaFi.

Meanwhile, MSTR’s share price has soared from around $100 to over $440 in the same period, reflecting the company’s strong correlation to bitcoin’s bull run.

Bullish Counterpart Gains Ground

On the flip side, the Defiance Daily Target 2x Long MSTR ETF, trading under the ticker MSTX, rose to nearly $50 on Monday, its highest since January 24. Trading volumes in MSTX have climbed for four consecutive days, reaching 9.2 million on Monday.

Despite the recent rally, MSTX has seen net outflows exceeding $175 million over the past six months, according to VettaFi data.

The recent price action reflects how bitcoin’s rally is reshaping sentiment around crypto-linked equities. As MicroStrategy’s shares continue their ascent, traders betting against the firm are rapidly unwinding their positions, leaving bearish ETFs like SMST deep in the red.