#ETH5L leveraged ETFs are typically designed to track multiples (e.g. 2x or 3x) of the target index's daily returns, maintaining a fixed leverage ratio through daily rebalancing. This mechanism is effective in single-day performance, but it can be skewed by the compounding effect when accumulating over multiple days.

If the market continues to rise or fall unilaterally, the return of a leveraged ETF may deviate slightly from the expected multiple, but it can still roughly follow.
However, when the market is volatile (e.g., up and down for a day), even if the index eventually returns to its original point, the net value of a leveraged ETF will gradually deplete due to the amplification of each volatility. This "loss of leverage" accumulates over a longer period of time, resulting in much lower than expected long-term gains.
Let's take a simple example: Suppose an index starts with 100 and a leveraged ETF has 2x leverage.
On the first day, the index rose 10% to 110, and the leveraged ETF rose 20% to 120.
On the second day, the index fell 9.09% to return to 100, and the leveraged ETF fell 18.18% to 98.18.
The index returned to its starting point, but the leveraged ETF lost 1.82%. This attrition can accumulate in volatile markets, and holding it for a long time can lead to a significant reduction in net worth.