BlockBeats news, on July 19, according to Bloomberg, the Chinese AI startup Moonshot AI achieved an unexpected technological breakthrough, triggering sharp declines in global AI and semiconductor stocks on Friday and reigniting market memories of the "DeepSeek moment" in 2025. The semiconductor benchmark index has fallen approximately 20% from its June high, entering bear market territory; the triple-leveraged semiconductor ETF SOXL has dropped more than 50% over the same period.
This sell-off demonstrates that when rapid advancements in AI technology rapidly shift market perceptions of winners and losers, leveraged ETFs, options, single-stock funds, and crypto-related products may be liquidated in tandem. According to Bloomberg Intelligence data, leveraged ETFs account for approximately 13% of U.S. ETF trading volume but only 1.2% of industry assets; even after accounting for embedded leverage, they represent less than 1% of the U.S. stock market.
Although these products have a relatively small overall scale, their holdings are concentrated in AI chips, highly volatile stocks, and newly listed companies. When leverage, concentration, and volatility rise simultaneously, the funds’ daily rebalancing may turn them into active buying or selling forces, further amplifying existing market trends.
The Korean market has recently provided a clear example: local retail investors heavily purchased leveraged products tied to Samsung Electronics and SK Hynix; after market sentiment weakened, the related funds were forced to sell an estimated billions of dollars worth of SK Hynix holdings.