19% Rally in Inverse Crypto ETF Highlights Growing Pessimism Toward Bitcoin and MicroStrategy

Inverse MicroStrategy ETF Jumps 19%, Underscoring Bearish Sentiment on Bitcoin Exposure

A leveraged ETF designed to profit from declines in MicroStrategy (MSTR) surged 19% last week, highlighting growing market skepticism toward the software firm’s aggressive Bitcoin holdings.

The Defiance Daily Target 2x Short MSTR ETF (SMST), which aims to return -2x the daily performance of MSTR shares, logged its best weekly performance since February, according to TradingView. It also marked a third straight week of gains — the ETF’s longest winning streak since its debut in August 2025.

The price move broke through a macro-level downtrend from September 2024 highs near $2,368, signaling a bullish breakout on long-scale weekly charts. The breakout was reinforced by a bullish marubozu candle, a technical formation that indicates strong buyer control and sustained upward momentum.

The rally reflects shifting sentiment around MicroStrategy, whose Bitcoin-heavy balance sheet makes it a proxy for BTC exposure. The company currently holds 628,791 BTC, valued at over $71 billion, making it the largest corporate Bitcoin holder.

The ETF’s recent rise has been supported by growing investor interest: net inflows totaled $16.3 million over the past six months, according to VettaFi. Meanwhile, its leveraged bullish counterpart — the 2x long MSTR fund — saw net outflows exceeding $275 million during the same period.

This divergence in positioning suggests traders are increasingly hedging downside risk or expressing bearish views on Bitcoin via MSTR, amid heightened macro uncertainty and weakening crypto market momentum.