BITX: How To Play Bitcoin`s Dead Cat Bounce (Technical Analysis)

Summary Volatility Shares` 2x Bitcoin Strategy ETF offers leveraged exposure to Bitcoin but has underperformed its 2x target during recent declines. BITX is best suited for experienced traders seeking short-term tactical moves, not for long-term investors, due to high fees and inherent risks. Bitcoin`s technical charts suggest a possible short-term relief rally provided BTC reclaims key support levels that are well within reach. A BITX swing trade is only considered if Bitcoin closes above $103k on the weekly chart; caution and active management are essential. I last covered the Volatility Shares` 2x Bitcoin Strategy ETF (BITX) for Seeking Alpha in June of this year. At that time, Bitcoin ( BTC-USD ) was in a very similar price range to which it currently finds itself. While the coin is off those prices by about 4%, BITX has performed slightly worse than its 200% leveraged goal based on total return: Data by YCharts At a total return of -13.6%, BITX has returned about 3x the performance of BTC to the downside. To be fair, there have been times throughout these last five months when holding BITX has worked out quite well for shareholders - even those shareholders who have held for far longer than would be recommended by the fund`s issuer. That said, since Bitcoin made a marginal new high on October 6th, the fund has been in near free-fall: Data by YCharts With Bitcoin down 18% over the last month, BITX has delivered on that 2x return strategy to the downside. Given the large selloff for both BTC and BITX over these last few weeks, traders are no doubt looking for local bottom opportunities to play a bounce in BTC and its proxies. In this update, I`ll offer my technical viewpoint on Bitcoin currently and lay out what I`d like to see in BTC before jumping into BITX for a swing trade. Recapping Risks Before we get into the charts, this brief section will serve as the obligatory risks acknowledgement when assessing leveraged ETFs. For a deeper dive into the risks associated with BITX specifically, I`d encourage both current shareholders and prospective buyers to read my initial coverage of the fund here . First, BITX is not a cheap product as it is an actively managed fund with a 1.85% management fee. Second, BITX is inherently risky because it introduces leverage to what is already a volatile digital asset. Third, given that the fund utilizes futures contracts for its Bitcoin-proxy leverage, expenses will eat away at returns over time as the fund manager rolls over contracts each month. Finally, BITX is flat out not an investment product, it`s a trading product. Per the fund`s issuer Volatility Shares: The Fund is intended to be used as a short-term trading vehicle. Investors in the Fund should actively manage and monitor their investments, as frequently as daily. The Fund is not intended to be used by, and is not appropriate for, investors who do not actively monitor and manage their portfolio. Thus, BITX should only be used for tactical moves by experienced traders who want leverage on Bitcoin`s upside. The question then is: Are we at a pivot point for BTC bulls? Possibly. Bitcoin Charts In this section, I`ll offer my opinion on Bitcoin`s technical setup over three different time frames; daily, weekly, and monthly. As a reminder, though I often approach my trades from a fundamental standpoint, I do occasionally trade on technicals alone. And while I suspect Bitcoin could be setting up for a `dead cat` bounce rally following a 21% selloff from its recent peak, I`m personally waiting for a very specific price level to confirm that reversal before I use BITX for a rebound trade. Here`s the daily chart: Bitcoin Daily Chart 11/6/25 (TrendSpider) The first thing I want to point out is the enormous wedge that goes back the last several months. Those lines are indicated with yellow. After attempting to break through the top of that wedge no less than three times going back to July, BTC quickly flushed down to the bottom of the wedge in a matter of just a few weeks. Following a defense of $100k on two consecutive candles, my view is Bitcoin is going to attempt a rally up to the 200-day moving average. From current levels, that would be good for a 9-10% gain; potentially 15-20% if played through BITX. But I want to be clear, I don`t think this is an overly bullish chart. The 50 and 200 day MAs are foreshadowing a `death cross` and after hanging on to the 200-day MA as support several times in October, that level is sure to be resistance going forward. Which brings us to the weekly chart: Bitcoin Weekly Chart 11/6/25 (TrendSpider) This is a pretty concerning chart for bulls for a couple of reasons, in my view. First, the yellow arrows display numerous bearish RSI divergences that go back to last December. But also the 50-week MA is now dangerously close to being given up - that level is highlighted with the red circle and arrows. This is what I`m watching through the end of the week. I am not personally willing to play BITX for the bounce unless Bitcoin retakes the 50-week MA on this week`s close. That level is currently $102,953. The last time Bitcoin closed a weekly candle below its 50-week MA after making a new all-time high a month prior, the coin fell by roughly 70% over the next twelve months. Now the monthly: Bitcoin Monthly Chart 11/6/25 (TrendSpider) I`ve shared this chart in previous Seeking Alpha articles covering Bitcoin. I`ve drawn a linear trend from the tops of the 2017 and 2021 cycles up to today. I don`t think it`s a coincidence that Bitcoin rallies keep stalling out at this trend-line. Furthermore, BTC is now approaching downside trend support that goes back to August 2024. Again, we see bearish RSI divergences between the cycle highs. And despite the claims from some that four-year Bitcoin cycles are dead, I flat out disagree that such a notion could be true when block reward halving events still exist. Closing Takeaways If I didn`t make it clear, I don`t find Bitcoin`s daily, weekly, or monthly charts to be all that encouraging for the medium term. As I write this on November 6th, I could certainly make the argument that a relief rally for BTC is imminent. That rally could even go as high as 10%. And if that is indeed the case, BITX actually makes some sense for traders who want to maximize gains on the move. From where I sit, I would wait for confirmation that Bitcoin can hold key support before reversing higher to test the 200-day MA. The level that I`m personally watching is $103k on the weekly close. Provided Bitcoin can retake that level, I`ll entertain a short term BITX swing trade. As always, be careful with leverage and have a plan when trading these volatile assets and financial products.

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