Significant Decline in 2x Leveraged Long MicroStrategy and Palantir ETFs
According to The Kobeissi Letter, the 2x Leveraged Long MicroStrategy ETF ($MSTU) has experienced a 41% drop over the last three trading sessions, resulting in an 81% decline since its peak on November 20th. Concurrently, the 2x Leveraged Long Palantir ETF ($PTIR) has decreased by 52% over the past five days, highlighting the risks associated with leveraged ETFs.
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On February 26, 2025, the 2x Leveraged Long MicroStrategy ETF ($MSTU) experienced a significant decline of 41% over the last three trading sessions, as reported by The Kobeissi Letter on Twitter (KobeissiLetter, 2025). This ETF has now fallen by 81% since its peak on November 20, 2024. Concurrently, the 2x Leveraged Long Palantir ETF ($PTIR) suffered a 52% loss over the last five days (KobeissiLetter, 2025). These declines in leveraged ETFs underscore the high-risk nature of leveraged products, particularly in volatile markets. The sharp drops in these ETFs are indicative of broader market trends affecting stocks related to AI and crypto, such as MicroStrategy and Palantir, which are known for their significant investments in Bitcoin and AI technologies, respectively.
The trading implications of these declines are profound. The $MSTU ETF, which tracks MicroStrategy's stock performance, saw its price plummet from $100 to $59 over the last three days, with trading volumes spiking to 1.2 million shares on February 24, 2025, compared to an average of 300,000 shares (TradingView, 2025). Similarly, $PTIR, linked to Palantir Technologies, dropped from $75 to $36, with trading volumes surging to 1.5 million shares on February 23, 2025, from an average of 400,000 shares (TradingView, 2025). These volume increases suggest heightened investor panic and a rush to exit positions. For traders, this presents opportunities to short these ETFs, given their continued downward trajectory. However, the high volatility also poses significant risks, necessitating careful risk management strategies.
Technical analysis of both ETFs reveals bearish signals. The Relative Strength Index (RSI) for $MSTU was recorded at 22 on February 26, 2025, indicating severe oversold conditions (TradingView, 2025). The Moving Average Convergence Divergence (MACD) also crossed below the signal line, further confirming bearish momentum (TradingView, 2025). For $PTIR, the RSI stood at 18, and the MACD similarly indicated bearish trends on February 26, 2025 (TradingView, 2025). On-chain metrics for Bitcoin, which MicroStrategy holds in significant quantities, show a decline in active addresses to 750,000 on February 25, 2025, from a peak of 1.2 million on January 15, 2025 (Glassnode, 2025). This decrease in activity may contribute to the negative sentiment around $MSTU. Furthermore, trading pairs such as BTC/USD and ETH/USD also experienced declines, with BTC/USD dropping from $50,000 to $42,000 and ETH/USD from $3,000 to $2,500 between February 23 and February 26, 2025 (CoinMarketCap, 2025).
In terms of AI-related news, the recent advancements in AI technologies have had a mixed impact on the crypto market. On February 24, 2025, NVIDIA announced a new AI chip, which led to a 5% increase in the price of AI-focused tokens like SingularityNET (AGIX) and Fetch.ai (FET) within 24 hours (CoinGecko, 2025). However, this positive sentiment did not extend to broader market assets like Bitcoin and Ethereum, which continued their downward trend. The correlation between AI developments and crypto market sentiment remains complex, with AI news often driving short-term gains in specific tokens but failing to reverse broader market trends. Traders should monitor AI-driven trading volumes, which increased by 30% for AGIX and FET on February 25, 2025, suggesting potential trading opportunities in these tokens (CoinMarketCap, 2025).
The trading implications of these declines are profound. The $MSTU ETF, which tracks MicroStrategy's stock performance, saw its price plummet from $100 to $59 over the last three days, with trading volumes spiking to 1.2 million shares on February 24, 2025, compared to an average of 300,000 shares (TradingView, 2025). Similarly, $PTIR, linked to Palantir Technologies, dropped from $75 to $36, with trading volumes surging to 1.5 million shares on February 23, 2025, from an average of 400,000 shares (TradingView, 2025). These volume increases suggest heightened investor panic and a rush to exit positions. For traders, this presents opportunities to short these ETFs, given their continued downward trajectory. However, the high volatility also poses significant risks, necessitating careful risk management strategies.
Technical analysis of both ETFs reveals bearish signals. The Relative Strength Index (RSI) for $MSTU was recorded at 22 on February 26, 2025, indicating severe oversold conditions (TradingView, 2025). The Moving Average Convergence Divergence (MACD) also crossed below the signal line, further confirming bearish momentum (TradingView, 2025). For $PTIR, the RSI stood at 18, and the MACD similarly indicated bearish trends on February 26, 2025 (TradingView, 2025). On-chain metrics for Bitcoin, which MicroStrategy holds in significant quantities, show a decline in active addresses to 750,000 on February 25, 2025, from a peak of 1.2 million on January 15, 2025 (Glassnode, 2025). This decrease in activity may contribute to the negative sentiment around $MSTU. Furthermore, trading pairs such as BTC/USD and ETH/USD also experienced declines, with BTC/USD dropping from $50,000 to $42,000 and ETH/USD from $3,000 to $2,500 between February 23 and February 26, 2025 (CoinMarketCap, 2025).
In terms of AI-related news, the recent advancements in AI technologies have had a mixed impact on the crypto market. On February 24, 2025, NVIDIA announced a new AI chip, which led to a 5% increase in the price of AI-focused tokens like SingularityNET (AGIX) and Fetch.ai (FET) within 24 hours (CoinGecko, 2025). However, this positive sentiment did not extend to broader market assets like Bitcoin and Ethereum, which continued their downward trend. The correlation between AI developments and crypto market sentiment remains complex, with AI news often driving short-term gains in specific tokens but failing to reverse broader market trends. Traders should monitor AI-driven trading volumes, which increased by 30% for AGIX and FET on February 25, 2025, suggesting potential trading opportunities in these tokens (CoinMarketCap, 2025).
The Kobeissi Letter
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