Top Performing Leveraged/Inverse ETFs: 07/20/2025

Last week, leveraged ETFs posted significant gains, predominantly driven by cryptocurrency-related assets and specific tech plays. The ProShares Ultra Ether ETF (ETHT) and 2x Ether ETF (ETHU) led with approximately 37% returns, propelled by substantial institutional capital injections and increasing Wall Street interest in Ether. Other top performers included Alibaba-linked (BABX) with 26% gains on AI chip news, and various crypto-exposed funds like Robinhood (HOOX) and Coinbase (CONL) benefiting from regulatory developments and increased institutional investment, underscoring the impact of targeted catalysts on highly leveraged positions.

Analysis

Last week's top-performing leveraged ETFs were driven by a series of distinct, high-impact catalysts rather than a broad market rally. The digital asset space was a primary driver, with Ether-focused ETFs (ETHT, ETHU) surging approximately 37% on the back of significant institutional capital inflows and growing corporate adoption. This crypto-positive sentiment was reinforced by regulatory developments, as the House's passage of the GENIUS Act and a stablecoin bill propelled leveraged ETFs tracking Robinhood (HOOX, +23.7%) and Coinbase (CONL, +16.6%). Company-specific fundamentals also played a key role, with Riot Platforms' (RIOX, +23.0%) leveraged ETF gaining after the company announced a substantial increase in Bitcoin production to 450 BTC. Separately, China-related equities showed strength due to a mix of factors: Alibaba's leveraged ETF (BABX, +26.0%) benefited from Nvidia's clearance to sell AI chips in China, while the broader China Internet ETF (CWEB, +13.7%) rose on positive trade data and signs of domestic regulatory de-escalation. Other notable movers included the EV sector ETF (EVAV, +23.8%), which reacted to US tariffs on Chinese graphite, and the IonQ ETF (IONX, +21.8%), which was lifted by positive technical news from a competitor, highlighting the high sensitivity of niche tech sectors to industry-specific events.

Key Decisions for Investors

• Investors should recognize the constructive tailwinds for the crypto sector, where a combination of regulatory progress and institutional inflows is creating momentum for names like COIN, RIOT, and HOOD, although the high volatility of the underlying assets remains a key risk.
• Tactical opportunities may exist in Chinese internet stocks, as seen with BABA and CWEB, which are benefiting from both specific corporate news and positive macroeconomic signals, but positions must be managed cautiously given the persistent potential for regulatory and geopolitical shifts.
• The outperformance of thematic ETFs like EVAV and IONX based on single news items underscores the viability of event-driven strategies in these niche sectors, however, investors must be prepared for the amplified volatility and rapid reversals inherent in leveraged products.
• Be mindful that these significant gains occurred in daily leveraged instruments, which are not suitable for long-term holds; it is crucial to differentiate between the short-term trading momentum and the fundamental, long-term outlook of the underlying assets.