"Now, the greatest regret is to my family."
Lately, the frequency of hearing this phrase is no less than that of "Do you believe in the light?" and "You should stand in the light, not let the light stand there" from two months ago.
These two short sentences encapsulate a 180-degree reversal in the market and a landscape of shattered hearts.
According to public data, South Korean stock SK Hynix has halved from its June high, erasing over 1,000 trillion won (approximately $800 billion) in market capitalization. The KOSPI index has retreated about 30% from its peak and has experienced 9 trading halts this year.
On July 28th, SK Hynix fell over 10%. U.S. memory stocks also plunged collectively, with SanDisk, Western Digital, Seagate, and Micron dropping 8% to 13% in a single day.
On July 29th, SK Hynix fell sharply again, dropping nearly 20% intraday, while a 2x long Hynix ETF plummeted over 30%, both setting their largest single-day declines in history.
A cross-market bloodbath thus unfolded. The extreme volatility flushed out numerous big V's and traders from the crypto circle. Among them were those who had earned their first pot of gold in the crypto market and those who had already achieved financial freedom. Now, all that's left are reflections and declarations of leaving the scene.
Half Market Conditions, Half Human Nature
Perhaps because the crypto market had been too quiet for too long, memory stocks became the best destination for active capital.
Dp Dapeng (@Dp520888) posted that from the end of last year to the first half of this year, the crypto market was in a constant downtrend. Bitcoin barely caught its breath around $60,000, while South Korean and U.S. stock markets soared on the AI narrative during the same period. Major exchanges, in their efforts to expand markets, had also opened up stock trading access.
He noted that he saw many crypto peers painfully cut losses on their crypto assets and go all-in on Micron and SanDisk at highs, only to lose over 30% subsequently. Had this money stayed in crypto, they could have at least held on until Bitcoin fell to $40,000.
People accustomed to high volatility and tormented by the lack of profit-making opportunities for over half a year found it hard to resist chasing the market that seemed more lucrative. As @hexiecs posted, "Is there any god who has always resisted buying memory stocks? I need to worship them."
However, narratives like AI, GPU, and storage come and go quickly in capital markets. Nvidia's stock price peaked in May and has already wiped out this year's gains, with its total market cap recently overtaken again by Apple. Now it's just storage's turn.
So, the starting point of this crash is half market conditions, half human nature.
Why the Crash This Time?
People transitioning from the crypto circle to the stock market are prone to culture shock.
On one hand, it's the leverage habit. Many start with 2x long positions or add even higher leverage via on-chain perpetual contracts. The same bearish candle that represents a mere pullback in a spot account becomes a liquidation event in a leveraged account.
How severe the damage to leveraged products was this round can be seen by looking at the South Korean 2x Long Hynix ETF. This fund was once the world's largest single-stock leveraged product, with peak assets around 130 billion HKD. Its cumulative decline since July has exceeded 80%, with assets now down to 25.6 billion HKD. Another 2x Long Samsung Electronics ETF also fell about 70% this month.
According to Hyperliquid data, on July 29th, the combined 24-hour trading volume for Hynix-related contracts SKHX and SKHY on the platform reached $1.765 billion, becoming the most actively traded asset on the platform, with heat and volume even surpassing BTC.
On the other hand, it's the rule differences. The stock market itself has several sets of rules: U.S. stocks have after-hours trading, South Korean stocks have NXT pre-market, A-shares have price limits, Hong Kong stocks have another set, each with its own trading hours, price bands, and settlement rhythms.
When these underlying assets are packaged into on-chain perpetual contracts, the extreme rules of other markets are bundled in as well. The wick on Hyperliquid on July 28th is a living example.
It is reported that on that day, only one lot of SK Hynix traded in the South Korean pre-market at around $868, about 30% lower than the previous close, right near the lower limit of the price band. This less than $900 real transaction was fed into the chain via the oracle, causing the SKHX perpetual contract to flash crash about 18% in one minute.
According to on-chain data, approximately $80 million was liquidated in the subsequent four hours, with open interest evaporating about $150 million.
Trade.xyz announced that this price was synchronized from that real transaction in the South Korean pre-market, with the oracle operating according to specifications and no technical error. Although Trade.xyz decided to fully compensate for the liquidation losses this time, it specifically stated this does not constitute a guarantee for similar situations in the future.
Reflections After the Bloodbath
After this bloodbath, many big V's on X began to reflect. Their review focus largely fell on whether the methods they had relied on to make money over the years were still effective after switching markets.
Chuanmu (@xiaomustock) stated that he made and lost money on storage stocks this year. The reason Buffett has survived in the capital market for so long is inseparable from his style of avoiding leverage, not going all-in, and always holding significant idle cash. Ordinary people either lose sleep from anxiety over using leverage to get rich quickly, or continue using leverage after making money, anxious in both profit and loss.
KOL En Heng (@EnHeng456) recounted his three major losses since entering the industry, with this storage wave being the heaviest, resulting in a combined drawdown of over ten million across several accounts, but fortunately, it was all spot trading with no leverage.
He also pointed out that multiple traders with consistently strong judgment and different cognitive frameworks successively entered the market, yet almost all ended up losing. When such a group forms a consensus at the same position but is collectively taught a lesson by the market, it indicates that this loss indeed exceeded their original understanding.
Zishi (@silverfang888), who claimed to have been liquidated for $20 million in semiconductors, also said his biggest regret was moving from crypto to trading stocks. In his view, he is merely a crypto player with limited insight, sitting across from people in the U.S. stock market arena whose cognition and capital far surpass his own.
After being liquidated, many fell into intense self-negation, attributing the losses of these months to their own shallow insight and low cognition. The concentrated outbreak of such emotions also serves as a reminder to everyone using leverage as an amplifier: what the market takes is never just the principal.
Some offered comfort, saying whose trading career hasn't experienced a few such drawdowns? Money lost can be treated as tuition paid. As long as one is still here with spirit intact, there will always be another journey ahead.
In truth, there are very few who can consistently win in the market. Those who can journey a bit further are often those who can still see their own boundaries at different stages.
