BITX Falls 50% As Bitcoin Retreats, Is A Rally Next?

"The Volatility Shares 2x Bitcoin Strategy ETF (NYSEARCA:BITX) has plunged roughly 50% in 2025, tracking Bitcoin's descent from over $105,000 in November to around $87,469 today. While Bitcoin dropped about 17% from its peak, BITX's leveraged structure amplified losses far beyond the expected 2x multiple. That disconnect reveals the hidden cost of daily rebalancing, which matters more than Bitcoin's direction when volatility spikes."

"The Macro Factor: Federal Reserve Policy and Risk Appetite Bitcoin's 2026 trajectory hinges on whether the Federal Reserve pivots toward rate cuts or maintains restrictive policy. Higher real rates make yield-free assets like Bitcoin less attractive, draining speculative capital from crypto markets. When the Fed signals dovish intent, liquidity flows back into risk assets, and Bitcoin typically rallies. Institutional adoption forecasts remain bullish for 2026, with analysts at Standard Chartered and Grayscale predicting significant gains if regulatory clarity improves and corporate treasury allocations continue."

"Watch the Federal Reserve's quarterly Summary of Economic Projections and post-meeting press conferences. If dot plots shift lower or Chair Powell hints at easing, Bitcoin could break above $100,000 again. Persistent inflation concerns or hawkish rhetoric would keep Bitcoin range-bound or lower, magnifying BITX's downside through leverage."

BITX plunged roughly 50% in 2025 while Bitcoin slid from over $105,000 in November to about $87,469, a decline near 17%. The ETF's leveraged daily rebalancing magnified losses well beyond the expected 2x multiple, exposing a structural cost that matters most during volatility spikes. The fund saw nearly $557 million in outflows, about 4.9% of AUM, and retail discussion has quieted. Buyers at November highs suffered large losses. Bitcoin's trajectory into 2026 depends on Federal Reserve policy, with rate cuts likely to restore liquidity and rallies, while persistent hawkishness could keep Bitcoin range-bound and worsen leveraged ETF losses.

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