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Leveraged bets against some of 2025's biggest market winners have gone spectacularly wrong. A clutch of ETFs tied inversely to Nvidia Corp (NASDAQ:NVDA), Tesla Inc (NASDAQ:TSLA), and gold have found themselves at the bottom of the performance charts this year, underscoring just how punishing compounding and momentum can be for short-side traders.
Among the laggards, the T-Rex 2X Inverse Nvidia Daily Target ETF (BATS:NVDQ) and the T-Rex 2X Inverse Tesla Daily Target ETF (BATS:TSLZ) stand out for their steep declines. Both funds seek to deliver twice the opposite of the daily performance of their respective stocks, a formula that works only when the underlying consistently falls.
Instead, Nvidia and Tesla have each enjoyed bursts of strength in 2025, aided by renewed investor enthusiasm for artificial intelligence infrastructure and electric vehicles. The result: NVDQ and TSLZ have hemorrhaged value.
NVDQ has slumped over 72% year to date, while TSLZ is down 74%.
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Gold's resurgence has also punished leveraged inverse products. The MicroSectors Gold –3X Inverse Leveraged ETN (NYSE:DULL), a bet on falling gold prices, has been among the year's weakest performers. As bullion prices touched fresh records in 2025 amid geopolitical jitters and renewed safe-haven demand, DULL dropped around 24% in a single month.
Inverse and leveraged ETFs magnify returns, or losses, through daily resets, which can erode value rapidly in volatile markets. Even when the underlying asset moves sideways, daily compounding can cause significant decay over time.
That effect has been particularly harsh for GraniteShares' 2x Short Nvidia ETF (NASDAQ:NVD), another inverse play on the AI giant, which has seen a 72% YTD value erosion.
When you hold a leveraged inverse product through volatile conditions, every bounce eats into your capital. Even if you correctly predict the market's direction, day-to-day volatility can erode returns and leave you with losses.
The underperformance of NVDQ, DULL, NVD, and TSLZ underscores the risk of treating short or leveraged ETFs as long-term hedges. These products are built for short-term tactical trades, not buy-and-hold strategies.
The common thread linking Nvidia, gold, and Tesla this year? Strong underlying momentum, and a trail of wreckage for anyone betting too aggressively against it.
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