BlockBeats News, July 19th. According to Bloomberg, the Chinese AI startup Moonshadow made an unexpected technological breakthrough, triggering a sharp global sell-off in AI and semiconductor stocks on Friday, and once again evoking the "DeepSeek Moment" of 2025. The semiconductor benchmark index has fallen by about 20% from its June high, entering a bear market; the triple leveraged semiconductor ETF SOXL has dropped by over 50% during the same period.

This sell-off demonstrates that as AI technology rapidly changes the market's assessment of winners and losers, leveraged ETFs, options, single-stock funds, and crypto-related products may be liquidated simultaneously. Bloomberg industry research data shows that leveraged ETFs account for about 13% of U.S. ETF trading volume, but only 1.2% of industry assets, and even with embedded leverage, they represent less than 1% of the U.S. stock market.

Although these products have limited overall scale, they are concentrated in AI chips, highly volatile stocks, and newly listed companies. When leverage, concentration, and volatility rise simultaneously, the daily rebalancing of funds may turn them into active buying or selling forces, further amplifying existing market trends.

The Korean market recently provided a clear example. Local retail investors bought a large amount of leveraged products linked to Samsung Electronics and SK Hynix. When market sentiment weakened, the related funds were forced to sell off SK Hynix holdings estimated to be worth billions of dollars.