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 need to 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 Korea's SK Hynix has halved from its June peak, with a total market value evaporating by over 1 trillion won (about 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 market's storage chain also collectively plummeted, with SanDisk, Western Digital, Seagate, and Micron generally dropping 8% to 13% in a single day.

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

A cross-market bloodbath unfolded. In this extreme market, a bunch of big names and traders from the crypto world emerged. Some of them had made their first bucket of gold in the crypto market, while others had already achieved financial freedom. Now, all that remains is reflection and declarations of retreat from the circle.

Half Market, Half Human Nature

Perhaps due to the prolonged stagnation in the crypto market, 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 market was in a continuous decline, while Bitcoin barely managed to breathe around 60,000 USD. During the same period, the South Korean and U.S. stock markets were pushed to new heights by AI narratives, and major exchanges rushed to connect stock trading to expand their markets.

He noted that he saw many peers in the crypto space reluctantly cutting losses on their crypto assets to bet heavily on Micron and SanDisk at high prices, only to lose over 30% afterward. If that money had stayed in the crypto space, at least they could have held on until Bitcoin dropped to 40,000 USD.

For those accustomed to high volatility and who had been tormented by the profit-making effect for over half a year, it was hard to resist chasing what seemed like a more lucrative market. As @hexiecs posted, "Is there anyone who has never bought storage stocks? I must worship them."

However, AI, GPU, and storage narratives perform quickly in the capital market but fade just as fast. In May, Nvidia's stock price peaked and 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?

For those transitioning from the crypto space to the stock market, it can be quite challenging.

On one hand, there is the habit of leverage. Many people start with two times leverage or even higher on perpetual contracts. The same bearish candle that causes a pullback in a spot account can lead to liquidation in a leveraged account.

The extent of the suffering from leveraged products can be seen in the Southern Double Long Hynix ETF. This fund was once the largest individual stock leveraged product globally, peaking at about 130 billion HKD. Since July, it has accumulated a drop of over 80%, with its latest scale reduced to only 25.6 billion HKD. Another double long 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 their own set of rules, each with different 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 without 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 focused on the methods they had relied on to make money over the years, questioning whether they still worked 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 lose sleep over leveraging for wealth or continue to use leverage after making money, feeling anxious about both gains and losses.

KOL Enheng (@EnHeng456) reviewed 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. Fortunately, he was trading spot the whole time and did not use leverage.

He also pointed out that several traders, known for their strong judgment and differing cognitive frameworks, entered the market one after another, ultimately incurring almost identical losses. When such a group reaches a consensus at the same position but is still educated by the market, it indicates that this loss indeed exceeded their original understanding.

Zishi (@silverfang888, who claimed to have lost 20 million USD in semiconductor investments) also expressed that his biggest regret was running from the crypto space to trade stocks. In his view, he was merely a short-sighted crypto player, and in the U.S. stock market, he was facing people with far superior knowledge and capital.

Many people fell into intense self-denial after their liquidations, 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 away not just the principal.

Some have come out to comfort, saying that who hasn't experienced a few such pullbacks in their trading career? Losing money is just paying tuition; as long as you are still here and your spirit remains, 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.