Shares tied to bitcoin-heavy corporate treasuries have been among the most vulnerable assets during this year’s crypto pullback, and the rout is now cascading into leveraged ETFs designed to amplify their movements. As bitcoin’s slide below $90,000 deepened market uncertainty, funds linked to Strategy—the largest corporate holder of the token—have suffered dramatic losses, raising broader questions about leverage, sentiment, and the fragility of crypto-equity correlations. What initially appeared to be a temporary correction is increasingly shaping the risk landscape for investors who rely on amplified exposures.

Leveraged ETFs Face Steep Losses as Crypto Momentum Unravels

The T-Rex 2X Long MSTR Daily Target ETF and the Defiance Daily Target 2x Long MSTR ETF—both offering double the daily performance of Strategy’s shares—have plunged nearly 85% since the start of the year. Their inverse counterpart has also fallen sharply, losing 48% over the same period. Such declines illustrate the compounding effects of leveraged structures during extended drawdowns, where volatility accelerates value erosion even when losses appear moderate on the underlying asset.

Strategy’s shares have dropped more than 40% in 2025, pressured by bitcoin’s retreat from its October peak of $126,223.18. The shift reflects a global turn toward risk aversion, with digital assets losing momentum as investors reassess liquidity conditions, regulatory pressures, and the sustainability of corporate bitcoin balance-sheet strategies.

Valuation Metrics and Management Comments Add to Market Turbulence

Investor attention has zeroed in on Strategy’s “mNAV”—a metric comparing enterprise value to bitcoin holdings—after CEO Phong Le signaled on a recent podcast that the company could consider selling bitcoins if the ratio deteriorates further. That remark, according to analysts, cut against former CEO Michael Saylor’s long-standing message of never selling. The deviation rattled markets, prompting concerns about liquidity management and the psychological anchor that Strategy had provided for long-term bitcoin bulls.

The company has not clarified its stance following media requests, leaving markets to speculate whether strategic flexibility is replacing ideological commitment. For investors, this uncertainty adds yet another layer of volatility atop already unstable crypto markets.

Earnings Collapse and Short Sellers Capitalize

Strategy’s revised outlook further intensified pressure. The company now projects a full-year result ranging between a $6.3 billion profit and a $5.5 billion loss, a stark downgrade from its earlier forecast of $24 billion in net profit—an estimate based on bitcoin reaching $150,000 by year-end. With that scenario no longer plausible in the current environment, Strategy acknowledged a $1.44 billion reserve for preferred dividends and debt servicing, underscoring ongoing cash demands.

Short sellers, meanwhile, have seized the opportunity, accumulating more than $2.5 billion in profit on the stock so far this year, including roughly $156 million in a single day this week. Strategy shares have now fallen nearly 70% from their November 2024 highs and have more than halved since joining the Nasdaq 100.

Analysts Remain Surprisingly Optimistic

Despite the company’s deteriorating fundamentals and extreme price volatility, analysts continue to express confidence in its long-term outlook. Ten of the sixteen brokerages covering the stock rate it a “buy,” with a median price target of $485—implying a potential rebound of more than 180% over the next year. Markets will also be watching Saylor’s upcoming appearance at a major crypto conference in Dubai for fresh cues on sentiment and corporate strategy.

Looking ahead, investors face a market defined by uncertainty: bitcoin’s path remains tightly tied to macro liquidity conditions, leveraged ETF performance will continue to magnify volatility, and Strategy’s evolving treasury policy could shape confidence across crypto-equity markets. Whether the current slump proves cyclical or structural will depend on bitcoin’s ability to stabilize and whether corporate holders can maintain conviction during sustained turbulence.