Crypto crash, MicroStrategy sales boost inverse ETFs

Leveraged and inverse exchange-traded funds rallied sharply last week after a steep sell-off in cryptocurrencies and a hotter-than-expected May U.S. employment report. The T‑Rex MSTZ rose about 63% and ProShares ETHD returned roughly 55% for the week.

MicroStrategy sold a portion of its Bitcoin holdings to fund dividend payments, ending a four-year policy of not selling coins. The company’s shares fell, and Bitcoin briefly traded below $60,000 while Ether slid toward $1,500 as investors pulled money from spot crypto ETFs and some network activity weakened.

Those moves amplified gains for ETFs that provide short or leveraged inverse exposure to crypto. The T‑Rex BTCZ posted gains alongside ProShares SBIT, which was up about 44%. ProShares SETH, a short Ether fund, returned around 23%.

A stronger jobs report lifted Treasury yields and increased expectations that the Federal Reserve could keep interest rates elevated. Inverse products tied to gold miners and technology names rallied, with the MicroSectors GDXD and Direxion JDST among top performers. Direxion’s DUST rose more than 24% and MicroSectors BERZ returned about 27% after the tech sector fell over 6% during the prior five trading days.

Fund moves reflected sharp one-week price swings caused by ETF outflows, MicroStrategy’s partial Bitcoin sales and a shift toward risk-off trading. Leveraged and inverse ETFs reset their exposure daily and magnify short-term price moves, so weekly returns can diverge from longer-term trends.

Traders use these funds to seek profits from near-term declines or to hedge positions. These products are generally designed for short-term trading rather than long-term buy-and-hold strategies because daily compounding can change returns over time.