In a major shift of market sentiment, the Defiance Daily Target 2x Short MSTR ETF (SMST) — a leveraged product that bets against MicroStrategy (MSTR) — soared 19% last week, marking its best performance since February 2025.
ETF’s Breakout May Signal Broader Bitcoin Bear Trend
The 19% gain not only ended a months-long downtrend for SMST but also formed a bullish marubozu candlestick on the weekly chart. This powerful technical formation, which features a large green body and almost no wicks, indicates strong buying momentum and often precedes extended upward moves.
“The macro breakout through the bearish trendline could mark a turning point,” said Omkar Godbole, a Chartered Market Technician.
Growing Bearish Bets on MSTR
The SMST ETF has seen net inflows of $16.3 million over the past six months. In contrast, its bullish counterpart has witnessed significant outflows, signaling a reversal in investor sentiment toward MSTR and, by extension, Bitcoin.
MicroStrategy, often viewed as a proxy for Bitcoin exposure, holds over 200,000 BTC and has been aggressively accumulating the asset. But the sharp rise in SMST suggests investors are hedging against downside risk — both in BTC price and in MSTR’s equity.
Is Bitcoin Losing Momentum?
Bitcoin (BTC) has remained under pressure, trading below $114,000 after failing to reclaim key support levels. The resurgence in leveraged bearish plays could reflect broader concerns over BTC’s short-term macro outlook, including:
- Rising U.S. yields
- Strengthening U.S. dollar
- Regulatory uncertainty
What’s Next?
With the SMST ETF breaking a long-term downtrend and forming a rare bullish setup, traders are watching closely to see if Bitcoin and MSTR follow suit to the downside. If momentum continues, this could signal deeper corrections ahead, especially if institutional sentiment turns risk-off.
The leveraged ETF surge isn’t just a technical breakout — it’s a signal that bearish bets on Bitcoin may be back in fashion.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.