Levered ETFs have become one of the most powerful forces in US equity markets: Daily rebalancing activity in US equity leveraged ETFs is up to a record $50 billion. Leveraged ETFs must rebalance daily to stay at their target leverage, adding more exposure after markets rise and reducing it after markets fall. This figure has more than QUADRUPLED since the start of 2026. Rebalancing activity now accounts for a record 1.60% of S&P 500 futures volume, exceeding the 2020-2024 peaks by 200%. To put it simply, leveraged ETFs have grown large enough that their daily rebalancing can now amplify market moves in both directions. Leveraged ETFs are amplifying market volatility like never before.

Levered crypto plays are getting crushed: The 2x leveraged long MicroStrategy ETFs, $MSTX, and $MSTU, are both down -82% year-to-date, trading at their lowest levels since their 2024 debuts. At the same time, the 2x leveraged long MicroStrategy ETF, $MSTP, is down -81%, also at its lowest since its June 2025 launch. This comes as MicroStrategy, $MSTR, has dropped -46% year-to-date, down to its lowest level since February 2024. Last week alone, $MSTX, $MSTU, and $MSTP nearly halved in value, as $MSTR declined -27%. Meanwhile, both long and short leveraged ETFs tied to MicroStrategy that launched in 2024 are down more than -90% since inception, even as billions of dollars have flowed into the funds. Leverage is magnifying losses across the crypto market.

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