Nvidia Leveraged ETFs Surge as Traders Bet on Rapid Recovery
Traders are aggressively investing in leveraged exchange-traded funds (ETFs) linked to Nvidia, anticipating a swift recovery for the AI chipmaker.
Asset managers report inflows of over $1 billion into the GraniteShares 2x Long NVDA Daily ETF, the largest of these leveraged funds. However, these inflows were insufficient to offset Nvidia's significant selloff, reducing its assets from a peak of $6 billion to $4.3 billion.
Despite Nvidia's stock suffering its biggest one-day market capitalization loss on Monday, leveraged long ETFs experienced heavy demand. The T-Rex 2x Long Nvidia Daily Target ETF saw $7.6 million in inflows, while the Direxion Daily NVDA Bull 2x Shares ETF saw $61.4 million in inflows.
Inflow data for the $3 million Leverage Shares 2x Long NVDA Daily ETF was unavailable, but trading volume was six times higher than normal. By day's end, inflows into this ETF had turned positive and remained so on Tuesday.
These inflows indicate speculative traders' optimism about Nvidia's recovery. Despite Monday's sell-off being driven by news of a new AI model from a Chinese competitor, traders anticipate a significant rebound in the company's stock.