Leveraged Bear ETF on MicroStrategy Surges 19%, Flashing Caution for Bitcoin Bulls

A leveraged U.S.-listed ETF betting against MicroStrategy (MSTR) shares surged 19% last week, signaling growing bearish sentiment toward both the firm and its massive Bitcoin holdings.

The Defiance Daily Target 2x Short MSTR ETF (ticker: SMST) posted its strongest weekly gain since February, according to TradingView. It marked the fund’s third consecutive weekly advance — the longest winning streak since its launch in August 2025.

Technically, the 19% rally broke through a long-term downtrend dating back to September 2024, when SMST traded near $2,368. The move is seen as a potential bullish breakout on logarithmic weekly charts, further reinforced by the formation of a bullish marubozu candle — a pattern that suggests strong momentum and buyer dominance.

The surge in SMST reflects mounting pessimism around MSTR and by extension, Bitcoin. MicroStrategy is the largest corporate holder of BTC, with 628,791 coins valued at over $71 billion at the time of writing.

SMST is designed to deliver -2x the daily performance of MSTR, effectively providing a leveraged inverse exposure. Over the past six months, the ETF has attracted $16.3 million in net inflows, according to VettaFi, while its bullish counterpart — a 2x long MSTR ETF — has seen over $275 million in outflows.

The divergence in flows and price action suggests traders are increasingly hedging or speculating against Bitcoin via MSTR exposure amid macro uncertainty and weak crypto momentum.