The Defiance Daily Target 2X Long MSTR ETF (MSTX), a leveraged ETF tracking MicroStrategy's stock price, plummeted 5.06% in Monday's pre-market trading session. The decline appears to be driven by mounting concerns over MicroStrategy's aggressive Bitcoin acquisition strategy and the stock's high valuation compared to the company's actual Bitcoin holdings.

Over the past several weeks, MicroStrategy has made multi-billion dollar Bitcoin purchases, funded by issuing new shares under an ATM Sales Agreement. As of November 17th, the company held a staggering 331,200 Bitcoins worth over $38 billion at current prices. However, MicroStrategy's market capitalization has ballooned to nearly $90 billion, more than twice the value of its Bitcoin holdings, raising concerns of overvaluation among analysts.

Additionally, reports have surfaced that the MSTX ETF, designed to provide 2x leveraged exposure to MicroStrategy's stock price, has struggled to accurately track its intended return target. This tracking discrepancy appears to have added to the selling pressure on the fund, as investors questioned its reliability as a trading tool.