Investors are piling into a leveraged bearish exchange-traded fund (ETF) targeting MicroStrategy, even as the fund trades at record lows — signaling a potential shift in sentiment toward the Bitcoin-heavy tech firm.

The Defiance Daily Target 2x Short MSTR ETF (SMST), which offers -2x daily exposure to MicroStrategy shares, has seen more than $24 million in net inflows since July 11, according to data from VettaFi. Notably, over $10 million flowed in on July 16 alone — the fund’s largest single-day intake since March.

SMST’s price touched a record low of $17.68 last week amid Bitcoin’s continued rally past $120,000. At the same time, MicroStrategy stock surged to an eight-month high of $456, propelled by optimism around crypto markets.

Despite the fund’s decline, bargain hunters stepped in. SMST rebounded 12% on Friday, approaching a long-standing bearish trendline that has capped price action since its August 2024 launch. As of Monday, the ETF was trading flat near $20.

Bearish Positioning Rises as Bullish Fund Sees Heavy Outflows

In stark contrast, capital is fleeing SMST’s bullish counterpart. The Defiance Daily Target 2x Long MSTR ETF (MSTX) — designed to amplify MicroStrategy’s upside — has registered over $118 million in outflows since July 11.

MSTX plunged 12% on Friday to $42.30, and held around the same level during Monday’s session.

The inverse flows between SMST and MSTX suggest traders may be rotating into downside positions, either as a hedge or as a speculative call that MicroStrategy’s recent rally — closely tied to Bitcoin’s price — could be reaching exhaustion.

Both funds offer leveraged exposure to MSTR’s daily performance, making them sensitive to volatility and short-term shifts in sentiment. With Bitcoin near record highs and MicroStrategy shares riding that momentum, leveraged ETF flows are now hinting at a more cautious or contrarian outlook among aggressive investors.