“Short Sellers Retreat as Anti-MSTR Leveraged ETF Plummets to Record Bottom.”

Bears Back Off as Defiance 2x Short MSTR ETF Hits New Lows

July 15, 2025

Investors betting against MicroStrategy (MSTR) are reversing course, as the Defiance Daily Target 2x Short MSTR ETF continues to plunge, notching its fourth consecutive record low.

Short ETF Slumps Further

On Monday, the Defiance ETF, trading under the ticker SMST on Nasdaq, fell 7.58% to settle at $18.17—its lowest level to date, according to TradingView. Trading was unusually active, with 2.88 million shares changing hands, marking the fund’s second-highest daily volume ever.

This surge in trading and declining price signals that bearish traders may be capitulating, abandoning bets against MicroStrategy. High-volume drops to new lows often indicate peak pessimism and a potential market bottom, as investors exit positions in droves.

Bitcoin’s Rally Turns Up the Heat

SMST’s latest drop coincides with bitcoin’s surge past $122,000 during early Monday trading in Asia, lifting sentiment across crypto-linked assets. Shares of MSTR rose more than 3% to $456 on Monday, their highest level since November.

MicroStrategy’s stock remains closely tied to bitcoin’s movements, given its significant bitcoin holdings. The company currently holds 601,550 BTC, valued around $70.56 million at the time of writing.

The Mechanics of the Short ETF

The Defiance 2x Short MSTR ETF aims to deliver -200% of MSTR’s daily price change, making it a leveraged vehicle for those betting against the stock. Despite an initial launch price above $2,000 last August, SMST has been largely in decline, aside from a brief spike from $1,600 to $2,368 later that same month. Over the past six months, the ETF has still managed net inflows of $8.2 million, according to VettaFi.

Meanwhile, MSTR’s share price has rocketed from roughly $100 to over $440 during the same period, driven largely by bitcoin’s meteoric rise.

Long ETF Benefits From Momentum

In contrast, the Defiance Daily Target 2x Long MSTR ETF (MSTX) climbed close to $50 on Monday, its highest since January 24. Trading volume has increased for four consecutive sessions, reaching 9.2 million shares.

Despite its recent gains, MSTX has posted net outflows exceeding $175 million in the past six months, per VettaFi.

Recent market action underscores how bitcoin’s strength is reshaping sentiment around crypto-linked stocks like MicroStrategy. With MSTR shares climbing, bearish traders are pulling back, leaving leveraged short products like SMST deep in the red.