At this point, the most sorry thing is to my family; the experts in the cryptocurrency circle have taken a tumble in the stock market

Author: Zhou, ChainCatcher

"At this point, the ones I feel most sorry for are my family."

Recently, I've heard this phrase as frequently as two months ago when I heard "Do you believe in light?" and "You should stand in the light, not have the light stand there."

These two short sentences encapsulate the 180° reversal of the market and a heart shattered into pieces.

According to public data, South Korean stock SK Hynix has halved from its June peak, with a total market value evaporating by over 1 trillion won (approximately 800 billion USD). The KOSPI index has retreated about 30% from its peak, and there have been 9 circuit breakers this year.

On July 28, SK Hynix fell over 10%. The U.S. stock storage chain also collectively plummeted, with SanDisk, Western Digital, Seagate, and Micron generally dropping between 8% to 13% in a single day.

On July 29, SK Hynix plummeted again, dropping nearly 20% during the session, and the leveraged funds betting on Hynix fell over 30%, both setting a record for the largest single-day drop in history.

A cross-market bloodbath unfolded just like that. In this extreme market, a bunch of big names and traders from the crypto circle emerged, some of whom had made their first pot of gold in the crypto market, while others had already achieved financial freedom. Now, all that remains is reflection and declarations of leaving the circle.

Half Market, Half Human Nature

Perhaps it's because the crypto market has been stagnant for too long, storage stocks became the best place for active funds.

Dp Dapeng (@Dp520888) posted that from the end of last year to the first half of this year, the crypto circle has been in a continuous decline, with Bitcoin barely catching its breath around 60,000 USD, while the Korean and U.S. stock markets were pushed to the sky by AI narratives, and major exchanges connected stock trading to expand the market.

He stated that he saw many peers in the crypto trading space painfully cutting their losses in crypto assets to go all-in on Micron and SanDisk at high prices, only to lose over 30% afterward. If that money had stayed in the crypto circle, at least it could have held out until Bitcoin dropped to 40,000 USD.

For those used to high volatility and tortured by the profit-making effect for over half a year, it's hard to resist chasing what seems to be a more lucrative market. As @hexiecs posted, "Is there a god who has never bought storage stocks? I must worship them."

However, AI, GPU, and storage—these narratives in the capital market come quickly and leave just as fast. In May, Nvidia's stock price peaked, and it has since erased this year's gains, with its total market value recently surpassed by Apple. Now it's storage's turn.

Thus, the starting point of this crash is half market and half human nature.

Why Did This Wave Crash?

Those transitioning from the crypto circle to the stock market often find it hard to adapt.

On one hand, it's the habit of leverage. Many people start with two times leverage or add even higher leverage on perpetual contracts. The same bearish candle that hits a spot account is just a pullback, but when it hits a leveraged account, it results in liquidation.

To see how tragic this round of leveraged products has been, just look at the Southern double-leveraged Hynix ETF. This fund was once the largest individual stock leveraged product in the world, peaking at about 130 billion HKD. Since July, it has accumulated a drop of over 80%, with the latest scale down to only 25.6 billion HKD. Another double-leveraged Samsung Electronics ETF also dropped about 70% this month.

According to Hyperliquid data, on July 29, the trading volume of SK Hynix-related contracts SKHX and SKHY reached a total of 1.765 billion USD within 24 hours, making it the most active asset on the platform, even surpassing BTC in heat and trading volume.

On the other hand, there are differences in rules. The stock market itself is divided into several systems; the U.S. market has after-hours trading, the Korean market has NXT pre-market, A-shares have price limits, and Hong Kong stocks have another set of rules, each with its own trading hours, price bands, and settlement rhythms.

When these assets are packaged into on-chain perpetual contracts, the extreme rules from other markets are also bundled in. The spike on Hyperliquid on July 28 is a live example.

It is reported that on that day, the Korean pre-market only had one SK Hynix transaction at about 868 USD, which was about 30% lower than the previous day's close, just hitting the lower limit of the Korean stock price band. This real transaction of less than 900 USD was fed into the on-chain oracle, causing the SKHX perpetual contract to flash crash about 18% within a minute.

According to on-chain data, about 80 million USD was liquidated in the following four hours, with approximately 150 million USD in open contracts evaporating.

Trade.xyz announced that this price was synchronized from the real transaction in the Korean pre-market, and the oracle operated according to established specifications, with no technical errors. Although Trade.xyz decided to fully compensate for the losses from this liquidation, it specifically stated that this does not constitute a guarantee for similar situations in the future.

Reflections After the Bloodbath

After this wave of bloodshed, many big names on X began to reflect. Their reviews often focus on the methods they have relied on to make money over the years, questioning whether they still work after switching markets.

Chuanmu (@xiaomustock) stated that he made money in storage this year and lost money in storage as well. Buffett has been able to survive in the capital market for so long due to his style of not using leverage, not being fully invested, and always keeping a large amount of idle cash. Ordinary people either become anxious and sleepless due to leveraging for wealth or continue to use leverage after making money, feeling anxious about both profits and losses.

KOL Enheng (@EnHeng456) summarized his three major losses since entering the industry, noting that this round of storage market losses was the heaviest, with several accounts collectively retreating over ten million, but fortunately, it was all spot trading without leverage.

He also pointed out that several traders with strong judgment and different cognitive frameworks entered the market one after another, and in the end, they almost all incurred losses. When such a group reaches a consensus in the same position but is still educated by the market, it indicates that this loss indeed exceeded their original understanding.

Zi Shi (@silverfang888, who claims to have lost 20 million USD in semiconductor investments) also expressed that his biggest regret was running from the crypto circle to trade stocks. In his view, he is just a short-sighted player from the crypto circle, sitting across from people in the U.S. stock market whose understanding and capital far exceed his own.

Many people fell into intense self-denial after liquidation, attributing their losses over the past few months to their shallow understanding and low cognition. This kind of emotional outburst also reminds everyone who treats leverage as an amplifier that the market takes back not just the principal.

Some have come out to comfort, saying that who hasn't experienced such pullbacks in their trading career? Losing money is just paying tuition; as long as you are still here and your spirit is intact, there will always be the next journey.

In fact, very few people can continue to win in the market. Those who can go further are often those who can still see their boundaries at different stages.