Leverage Decay Forced MSTU's 91% Plunge

"If you own MSTU, you're making a specific bet: that MicroStrategy's Bitcoin holdings will move sharply higher in the near term, and that daily compounding will work in your favor. This ETF delivers 2x leveraged exposure to MSTR, which itself functions as a leveraged Bitcoin proxy holding over 500,000 BTC. The result is a triple-amplified volatility machine designed for tactical traders, not long-term holders."

"Recent performance illustrates the mechanics. Year-to-date through mid-January, MSTR gained roughly 13% while MSTU climbed 23%. That's not the theoretical 26% you'd expect from 2x leverage because daily resets create friction. Over longer periods, this drag intensifies. The one-year numbers tell the story: MSTR fell 53%, but MSTU collapsed 91%. Volatility decay is real, and it compounds ruthlessly against you in choppy or declining markets."

"Prediction markets on Polymarket suggest crowd sentiment leans bullish but measured. Traders assign an 88% probability Bitcoin reaches $100,000 by year-end, but only 51% odds it hits $120,000. More telling: there's a 63% chance Bitcoin dips to $75,000 at some point this year. That kind of drawdown would devastate MSTU through both the underlying decline and compounding losses from daily resets."

MSTU is a 2x ETF that tracks MSTR, which acts as a leveraged Bitcoin proxy holding over 500,000 BTC. The ETF produces double exposure to MSTR and creates triple-amplified volatility with daily compounding that helps in short-term rallies but causes significant drag over longer periods. Year-to-date MSTR rose about 13% while MSTU rose 23%, but over one year MSTR fell 53% and MSTU fell 91%, showing volatility decay and compounding losses in choppy or declining markets. Bitcoin's price over the next six months will largely determine outcomes. Market odds show a strong chance of $100,000 but meaningful probability of a $75,000 dip. Watch weekly closes, support near $90,000, and conviction above $100,000. Earnings on February 5 adds event risk.

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