The Defiance Daily Target 2X Long MSTR ETF (MSTX) experienced a significant 24-hour plunge of 5.37% on Monday, despite positive news surrounding MicroStrategy's (MSTR) recent Bitcoin purchases. This unexpected downturn comes as MicroStrategy, the ETF's underlying asset, announced a substantial increase in its Bitcoin holdings.

MicroStrategy, which now operates under the name Strategy, disclosed that it had resumed buying Bitcoin, purchasing 4,225 BTC for $472.5 million last week at an average price of $111,827 per Bitcoin. This acquisition has lifted the company's total Bitcoin holdings to over 600,000, valued at more than $70 billion at current prices. The news initially propelled MicroStrategy's stock toward an eight-month high, with shares surging by 3.8% to close at $451.02.

The divergence between MSTX's performance and MicroStrategy's positive momentum is puzzling, given that MSTX aims to provide 2x daily leveraged exposure to MSTR. This disconnect could potentially be attributed to profit-taking after recent gains or other market factors affecting leveraged ETFs. Investors should note that while MicroStrategy's Bitcoin strategy has driven significant gains in 2025, with its stock up 55% year-to-date, leveraged ETFs can be subject to more volatile price movements due to their structure.

The broader context of MicroStrategy's Bitcoin purchases is a growing trend of corporate Bitcoin treasuries. Other companies, such as Genius Group and GameStop, are also increasing their Bitcoin holdings or exploring cryptocurrencies as part of their treasury strategies. However, some experts warn of potential risks, including supply shocks and liquidation risks if Bitcoin prices were to fall significantly. As the corporate Bitcoin treasury trend continues to evolve, investors in related securities like MSTX may need to closely monitor both the underlying asset's performance and broader market dynamics affecting leveraged ETFs.