A leveraged exchange-traded fund (ETF) that moves in the opposite direction of Strategy (formerly MicroStrategy) stock jumped 7% on August 5, amid correction risk in Bitcoin price.
While the market sentiment seems to have turned uncertain since the past week, the rise in bearish Strategy (MSTR) suggests that traders are speculating on the downside of the stock.
The Defiance Daily Target 2x Short MSTR ETF, listed under the ticker SMST on Nasdaq, is designed to return twice the inverse of MSTR’s daily price change, meaning if MSTR goes down by 1%, the ETF aims to go up by 2%.
At the time of publishing, SMST is trading near at $24.49 on Nasdaq exchange, as per TradingView data.Â
Bearish MSTR ETF (SMST)
The SMST ETF closely tracks the performance of Strategy (MSTR), the largest corporate holder of Bitcoin. Right now, it owns more than 628,000 BTC, valued at over $71 billion. Being the largest Bitcoin holder, MSTR share price movement is closely tied to Bitcoin’s market price. When Bitcoin goes down, MSTR tends to fall too.
In the last six months, this bearish ETF has attracted $16.3 million in net inflows, according to data from VettaFi. In contrast, its bullish counterpart, which bets that MSTR will rise, has seen over $275 million in outflows. That shows how traders are shifting their positions and possibly expecting more downside in Bitcoin or related stocks.
Some traders think the rise in this ETF is not just a quick rebound but it shows that many are worried about Bitcoin’s price, especially now that markets are shaky.
Strategy shares have been under pressure since September 2024, when they peaked at around $2,368. The shares fell hard after that, and the recent move in the ETF shows people are still careful about the stock.
The SMST ETF is one of a few tools that let traders take leveraged short positions on Bitcoin-related stocks without holding the assets directly. Its recent gains could mean more traders are preparing for possible drops in Bitcoin or MSTR in the weeks ahead.
Also Read: Bitcoin ETFs See $196M in Outflow While Ethereum ETFs Gain $73M
