Recently the SEC halted its review of highly levered ETFs in a signal they may be attempting to curb this burgeoning asset class. Source: Bloomberg, 1-year return data from 12/31/2024 – 12/3/2025. 3-year return data from 12/4/2021 – 12/4/2025. For illustrative purposes only. In the past, levered ETFs like the ones above have been reserved for large index-like asset classes which typically don't exhibit outsized volatility before additional leverage is applied. Even so, when adjusting for their Beta (Risk!) ...

Core Insights - U.S. stocks are experiencing strong performance in 2025, with the S&P 500 up 16.8% and the Nasdaq-100 up 22.3% year to date [1][2] - Conversely, leveraged ETFs that bet against stocks or sectors have performed poorly, with significant losses reported [2] Group 1: Poor Performing ETFs - Direxion Daily Junior Gold Miners Index Bear 2x Shares ETF has seen a year-to-date performance decline of 89.2%, as gold prices have surged approximately 60% [4][5] - Direxion Daily Gold Miners Index Bear 2x Shares ETF is down 87% year to date, mirroring the performance of junior gold miners but focusing on larger gold mining stocks [7] - Direxion Daily Semiconductor Bear 3x Shares ETF has dropped 85.8% year to date, as the AI boom has significantly increased demand for semiconductor stocks [11][12] Group 2: Cryptocurrency-Related ETFs - Defiance Daily Target 2x Long MSTR ETF is down 82.8% year to date, as its performance is tied to the declining value of MicroStrategy, which has fallen over 45% [14] - T-Rex 2x Long MSTR Daily Target ETF has a similar performance, down 82.7% year to date, with a slightly lower expense ratio providing minimal relief to shareholders [15]

Core Insights - Leveraged ETFs linked to bitcoin hoarder Strategy have suffered significantly due to the decline in bitcoin prices, impacting the largest corporate holder of the token [1][2] Group 1: Performance of ETFs and Strategy Shares - T-Rex 2X Long MSTR Daily Target ETF and Defiance Daily Target 2x Long MSTR ETF have lost nearly 85% of their value in 2025, while T-Rex 2X Inverse MSTR Daily Target ETF has decreased by 48% [2] - Shares of Strategy have fallen over 40% this year, primarily due to bitcoin's drop below $90,000 [2] - Bitcoin reached a record high of $126,223.18 in October but has since declined due to global risk aversion [3] Group 2: Company Metrics and Market Reactions - Investor attention is on Strategy's "mNAV" metric, which is currently estimated at around 1.1, following CEO Phong Le's comments about potentially selling bitcoins if the ratio falls below 1 [4] - Comments from CEO Phong Le have raised concerns about the company's commitment to not selling bitcoin, which could undermine its marketing message [5] Group 3: Earnings and Short Selling - Strategy has revised its full-year outlook to a profit range of $6.3 billion to a loss of $5.5 billion, down from a previous forecast of $24 billion in net profit [6] - The company disclosed a $1.44 billion reserve for dividends on preferred stock and interest on debt, while short sellers have gained over $2.5 billion from the stock this year [7] - Since joining the Nasdaq 100 index, Strategy shares have more than halved, dropping about 70% from their peak in November 2024 [8]