PhyrexNi

Pure luck. Before I shorted the chipmunk in the afternoon, I was shorting ADR—still lost nearly 20%. At the time I basically just decided to bet blindly. Then by afternoon, the short at $145 got eaten, and while I was still considering whether to stop-loss, the ADR kept dropping.

I’m happy to keep holding. Turned out I held it until just now, and then I noticed the ADR shows signs of bouncing back from 134. After getting burned this morning, it’s already nearly up 50%. I’ve covered my meals for the next two days—what more do I need? I closed it straight at 136.

What happens next—whether it rises or falls—has nothing to do with me anymore. The rest is just about what happens tomorrow morning. Every day, my $SKHY won’t be carried overnight. Closing early today means I can rest earlier too.

😂I’m really annoyed today. At around 8 a.m. when I got up, I saw that SK in the Korean stock market was falling. At that time it hadn’t dropped much—only about 0.5%—but $SKHY had already fallen more than 1%. My judgment was that SK would probably keep dropping, but I wasn’t sure whether it might bounce a bit before dropping again. Back then, SKHYUSDT was around $142, so I placed an order at $144, then went to sleep.

When I woke up at just after 11, I found my order at $144 didn’t get filled. At that time SK had already dropped 4%. I felt it might be another circuit breaker situation, so I opened a short position at $141, then went out to take care of things.

Sometime just before 3 p.m., I checked and saw I was up about 30%. In situations like this, I usually set a stop-loss (take-profit) level to lock in at least 20% of the gains. But I was in a meeting, so I forgot 😂.

After the meeting, I checked again and it was actually down more than 20%. I was so frustrated. Right in front of me there were only two options: either stop-loss immediately, or wait until the evening market open. I hesitated, then placed another order at $145 and planned to wait until the evening. If that night $145 got filled and I was still in the red, then I’d stop-loss. If there was still a possibility of further downside, then I’d hold on a bit longer.

Originally I didn’t have to gamble tonight. Having a 20% profit already would be enough for today’s meal expenses. But because of one careless mistake, I was forced to gamble on the evening. Mainly it was because I had too many things to deal with today—it’s only now that I just turned on the computer. Then I have to go to the airport to pick up Hazel/Flower Rabbit (the “花栗鼠”), bring him home, cook dinner for him, and open the computer again… it’ll probably be late tonight. I’ll just write a bit at the airport. Feeling awful.

Didn’t short for two straight days. After that, Hai Kise ADR finally gave me an opportunity today in the early hours. The past two days, I watched both SK and the ADRs rising, but the rebound felt extremely forced. I’ve also been keeping an eye on the data for Korean stocks and found that leverage is still quite high, and overseas funds don’t seem very proactive about bottom-fishing. Most importantly, leverage in U.S. semiconductors is also very high, and even retail investors in the U.S. have started to flee.

So in the early hours, I noticed that although SK was up during the day, the ADRs were consistently down throughout the night. This situation is something I’ve never seen before. Either the ADRs are starting to kill the high premium, or semiconductors are being dumped by users. If it’s the former, shorting could be risky; but if it’s the latter, shorting is essentially a sure thing.

At the time, my plan was to short at $150, then add another short at $155. That way, if it turns out to be that SK rises during the day and the ADRs also go up, I could still try to gauge whether the ADRs would continue to compress their premium at night. But if it’s retail investors selling off, then SK would likely fall during the day and the ADRs would probably follow suit. In the end, everyone knows how that worked out.

I woke up a bit after 8 in the morning and saw that SK had already dropped more than 5%, so I didn’t pay attention further and went back to sleep. Currently, my stop-loss (take-profit) at $SKHY is set at $147 to prevent a rebound in the afternoon or evening.

The leveraged funds driving the semiconductor market are starting to turn on themselves. The U.S., South Korea, and Taiwan all enter a deleveraging cycle at the same time.

In June, more leveraged ETFs kept adding fuel to the AI and semiconductor rally. By July, they began rapidly reversing and deleveraging. The assets of U.S. technology leveraged ETFs have fallen by about $50 billion from their June peak, and now stand at just under $50 billion—back to the lowest level since April.

The leveraged ETFs related to South Korea and Taiwan have also declined by more than half from their peaks, leaving about $27 billion. Combined, the two markets still have roughly $77 billion. In just a little over a month, nearly half of the leveraged ETF assets have disappeared.

The shrinkage in leveraged ETF size comes from several sources: part is net asset value losses caused by declines in the underlying stocks, part is investors’ active redemptions, and part is the daily rebalancing funds perform to maintain 2x or 3x leverage. After investors redeem, the funds must sell stocks. Once the underlying stocks fall, to maintain the target leverage, the funds also need to reduce their positions.

When markets are rising, this mechanism continually creates mechanical buy pressure. As share prices rise, the ETF’s net asset value increases. To keep maintaining a fixed leverage ratio, the fund has to keep buying the underlying stocks. The higher the stock price goes, the more shares it buys, and the larger the fund size becomes.

After the trend reverses, the whole process goes the other way. Stock declines cause the ETF’s net asset value to shrink; the fund starts cutting exposure. As investors see losses widen, they continue redeeming, which in turn forces the fund to sell even more underlying stocks.

The 3x long U.S. semiconductor ETF, $SOXL, is already down about 67% from its June peak. After falling 67%, it would need to rise more than 200% just to return to its original level.

U.S. technology products are betting on Nvidia, AMD, Broadcom, and Micron. South Korean capital is concentrated in SK Hynix and Samsung Electronics. Taiwan’s bets are concentrated in TSMC and the semiconductor supply chain. Ultimately, all these bets are on AI computing power, advanced manufacturing processes, and memory chips.

Earlier on, global funds were buying the same story at the same time. Leveraged ETFs further amplified that trade. Now that U.S. tech stocks and South Korean semiconductors are falling at the same time, leverage in all three markets has started contracting together.

Of course, with leveraged ETF assets already nearing a half cut, that also indicates that the exposure created by leverage is being cleared.

Semiconductors have just wiped out $2.2 trillion—yet retail investors are using record-high inflows to bet on a rebound

In July, the Philadelphia Semiconductor Index fell about 21%, posting the worst single-month performance since October 2008. In just one month, global chip stocks have lost roughly $2.2 trillion in market value.

But this drop hasn’t scared retail investors away. Instead, it has sparked even larger retail “bottom-fishing.”

Over the past week, semiconductor ETFs attracted about $12 billion in net inflows, setting a record high. Semiconductor ETFs account for only about 1% of all ETF assets, yet they pulled in roughly 25% of the new money entering the ETF market over the past five trading days.

In plain terms: for every $4 that flows into the ETF market recently, close to $1 goes into semiconductors.

More importantly, the money isn’t going entirely into standard semiconductor ETFs. It’s going into triple-leveraged semiconductor exposure. $SOXL saw about $2.5 billion in inflows over the week—its second-highest all-time level.

Many retail investors are no longer satisfied with simply buying the dip in chip stocks. They’re using triple leverage to bet that the plunge in July has ended—and that semiconductors will then rebound quickly.

That’s also why we saw a rapid rebound in semiconductors over the weekend—but during U.S. trading hours, not in Korea.

Last week, we all knew the Korean stock market was performing poorly. But the situation where price action during the U.S. session directly reverses it is mainly because after ETFs receive new capital, they have to buy their constituent stocks. For example, for $SOXL to maintain its daily three-times exposure, when the market rises, it still needs to keep adding risk positions.

Between rising stock prices, ETF inflows, and rebalancing of leveraged products, it’s easy to form a continuous pattern of mechanical buying. But even $12 billion in inflows is hard to prove that semiconductors are already at the bottom.

All it really shows is that retail investors have placed a large amount of capital on the idea that July’s decline has already bottomed out. Going forward, semiconductors may rebound quickly—of course, these are retail investors’ bets, and whether that turns out to be true is something nobody can say for sure.

But if semiconductors fall again, the leveraged ETFs’ daily rebalancing, volatility drag, and investor stop-losses would all amplify selling pressure at the same time. The mechanical buying that drives prices higher could quickly turn into mechanical selling.

Volatility in the Korean stock market has surpassed Bitcoin—one country’s index is starting to behave more like cryptocurrency

According to Bloomberg data as of July 31, the KOSPI index’s return volatility this year has reached 63%, the highest among the major global country stock benchmarks tracked in its statistics.

Over the same period, Bitcoin’s volatility is only 48%. That means this year the Korean stock market is not only more volatile than Asian markets like Japan and Taiwan, but it’s even more volatile than $BTC.

A country’s stock index volatility exceeding Bitcoin is, in itself, a highly unusual phenomenon.

Bitcoin is a single asset, with its price mainly driven by capital flows, leverage, and market sentiment. The Korean stock market, by contrast, includes hundreds of listed companies. In normal circumstances, gains and losses across different industries and companies tend to offset each other, so index volatility should be far lower than that of a single high-risk asset.

But the problem with the Korean stock market right now is that the index is becoming increasingly concentrated in a handful of stocks. In particular, Samsung and SK Hynix—together their combined weighting in the KOSPI is already over 50%. When sentiment in the semiconductor sector shifts, it can almost directly determine the direction of the entire Korean stock market.

This concentration is further amplified by single-stock leveraged ETFs.

At the height of the most frenzied trading, Samsung Electronics, SK Hynix, and their related leveraged ETFs together at one point accounted for more than 70% of South Korea’s daily trading value.

In plain terms: this stock market in Korea—currently worth about $3.4 trillion, and once above $4 trillion at its peak—sees most trading revolve around just two companies and their leveraged products.

This year, Korean retail investors have net bought more than 110 trillion won of KOSPI stocks, roughly $7.7 billion. Retail flows often chase in after prices rise, and when the market falls they cut exposure, redeem, or are forced to close positions all at the same time.

So the Korean stock market currently often shows a pattern: a sharp sell-off one day, followed by a strong rebound, and then another drop.

Whether the Korean stock market has already finished de-leveraging is something nobody can say for sure right now—suggesting that this bout of intense volatility may not be over yet.

Foreign investors begin to bottom-fish in the Korean stock market, while retail margin leverage has already fallen from 50 billion yuan to $20 billion

The pace of de-leveraging for Korea’s leveraged ETFs is even faster than when I last wrote these figures.

At the time of my last update, the total assets under Korea’s leveraged ETFs were still around $26.5 billion. After leverage amplification, the total exposure accounted for about 2.1% of the free-float market cap of the Korean stock market. In the latest data, total assets have fallen further to roughly $20 billion, and leveraged exposure has also dropped to about 1.5%.

Compared with the late-June peak, the total size of Korea’s leveraged ETFs has shrunk by about 60% from over $50 billion. The nominal exposure-to-free-float market-cap ratio has also fallen from 3.3% to 1.5%, essentially returning to the levels seen from late February to early March.

As the stock exposure maintained by funds continues to shrink, the mechanical buy pressure on Samsung Electronics and SK hynix is also quickly disappearing.

When Korean semiconductors rose earlier this year, as leveraged ETFs’ net asset values increased, the funds had to keep buying to maintain a fixed leverage. The larger the fund size, the stronger the rebalancing buys before the close. Rising stock prices also attracted more retail money to enter, creating a loop of gains, subscriptions, adding positions, and then further gains.

But when stock prices fall, the funds’ net asset values shrink. Retail investors’ redemptions force the funds to cut positions again. Daily rebalancing then adds more selling in down markets. The capital that previously amplified gains in Samsung Electronics and SK hynix is now steadily weakening the market’s ability to absorb trades.

This also helps explain why, in the latest fund flows, foreign investors have begun to make large-scale net purchases, while Korean retail investors are selling in concentrated fashion. Retail investors may not have suddenly turned collectively bearish; more likely, the leveraged funds that picked up shares at the high point earlier finally used the rebound to reduce their positions. Then, after valuations and leverage have both fallen sharply, foreign investors start picking up the shares being sold by retail investors.

However, this round of de-leveraging is not yet over.

At present, the scale of Korea’s leveraged ETFs is still close to three times the level at the beginning of the year, and the leveraged exposure as a share of free-float market cap is also still noticeably higher than at the beginning of the year. Leverage has come down from extreme levels, but it has not fully returned to normal.

Foreign investors resume large-scale buying in the Korean stock market, while retail investors concentrate on selling

Korea’s market funding structure saw a very clear reversal at the end of July.

For most of this year, foreign investors have continued to reduce their holdings of Korean stocks, while Korean retail investors have kept adding positions. The capital has been mainly concentrated in Samsung Electronics, SK Hynix, and related leveraged ETFs. The lower the share price falls, the more retail investors buy—almost all the shares foreign investors sold off were taken up by domestic individual investors in the form of increased leverage.

But in the latest trading day, foreign investors’ net purchases of Korean stocks were nearly 60 trillion won in a single day, while Korean individual investors posted net sales of nearly 100 trillion won, marking the most extreme round-trip of share transfers this year.

This suggests that Korean retail investors who had been catching falling prices are now starting to cut back on positions on rebounds.

Some of this could be money returning to their cost basis and then exiting; some could be financing accounts voluntarily reducing leverage; and some could come from leveraged ETF redemptions. After consecutive declines, margin calls, and forced liquidations, the amount of cash that retail investors can continue to put into the market has clearly decreased, and risk appetite has also begun to fall.

Foreign investors, meanwhile, buy back Korean stocks when retail investors are selling in a concentrated manner. After the earlier sharp adjustments, the valuations, position crowding, and leverage risks of Samsung Electronics and SK Hynix have all declined. Global capital has started to reassess the value of allocating to Korean semiconductors.

Previously, the trading structure was foreign investors exiting while retail investors increased leverage to take the other side. Now it is gradually turning into retail investors de-leveraging while foreign investors refill at lower levels.

Single-day capital flows are not yet enough to confirm that the Korean stock market has completed its reversal, but the shares are moving from highly leveraged retail investors back to global institutions. For a market that has already undergone a deep drawdown, this is very likely a mutual probing between buyers and sellers.

Market leverage hits a record high, and the stocks U.S. retail investors like most fall 13%

Among a basket of stocks tracked by Goldman Sachs that U.S. retail investors prefer, the group is down about 13% so far this month. If the decline holds through month-end, it would mark the worst single-month performance since 2022.

But just two months ago, these stocks were up roughly 17% and 16%, respectively—bringing the two-month cumulative gain to nearly 36%. In a matter of just one month, a batch of stocks U.S. retail investors favor has swung from one of the market’s strongest directions to the worst-performing set in terms of declines.

These stocks are mainly concentrated in high-volatility technology sectors such as artificial intelligence, semiconductors, memory chips, cybersecurity, and other similar areas. Representative names mentioned in public reports include AMD, Micron, and CrowdStrike. More broadly, retail-favored popular stocks also include Nvidia, Tesla, Palantir, and IonQ, among others.

The common traits are obvious: these are stocks that had surged earlier, carry high valuations, and are highly volatile—driving retail investors’ FOMO (fear of missing out) sentiment.

In my previous post, I mentioned that U.S. margin and securities lending debt has reached a record $1.53 trillion, while brokers’ net credit balances have fallen to negative $1.061 trillion. This suggests that when retail-favorite stocks begin to drop, the market’s leveraged positions and margin don’t fall in sync—instead, they remain at historic highs.

During the uptrend, the more the stock price rises, the higher the investors’ account equity becomes, and the more money they can borrow. New margin financing then keeps buying the best-performing stocks from earlier. But once the market weakens, the logic reverses: falling prices drag down account equity, margin pressure rises, and investors have no choice but to inject cash or cut positions.

Plainly put: whatever retail investors piled on leverage to chase in the first two months kept rising even faster. Now that the market is starting to pull back, the stocks retail holdings are most concentrated in—and that had risen the most earlier—have become the earliest to see double-digit declines.

The faster they rose early on, the more crowded the positions became, and the higher the financing ratio—after the downturn, the number of shares that must be sold to reduce risk will also be larger.

BTCFi has entered the second half, and the significance of chasing short-term high yields is diminishing.

Starting from mid-2024, staking yields will begin to experience structural compression, and points, subsidies, and short-term incentives will become increasingly difficult to support long-term returns. Bitcoin holders are now more concerned with whether BTC can maintain its long-term asset properties while transitioning into a more efficient yield structure.

This is also the core change in Bedrock 2.0. In the past, Bedrock was more easily understood as a BTC restaking protocol, but Bedrock 2.0 has upgraded to become a smart yield engine for Bitcoin capital. Users can access different strategies through uniBTC, while Bedrock is responsible for allocating BTC into various vaults that are more suitable for yield.

In the future, Bedrock's yield structure will cover market-neutral quant strategies, on-chain liquidity, lending credit, and real asset returns.

Among them, the Selini vault is a typical example, where Bedrock provides an entry point for BTC investments, Cap offers a credit framework, Symbiotic provides a shared security layer, and Selini Capital is responsible for market-neutral arbitrage and quantitative execution. Strategies that were previously closer to institutional funding are now being productized for ordinary BTC holders.

The most important change here is that BTCFi is transitioning from a crude mining, points, and subsidies model to a phase that resembles asset management. Yields must be traced back to their sources, risks should be examined in terms of structure, funds need to be followed in their paths, and exits should be evaluated based on liquidity. Furthermore, if BRclaw can clearly explain the source of the vault's yields, risk exposures, and strategy differences, it will become the on-chain analyst within BTCFi.

Finally, let's talk about $BR . After Bedrock 2.0, the value of BR will be more tied to vault access privileges, priority entry, yield enhancement, and AI analytical capabilities. Especially since institutional-grade vaults often have capacity limits, if high-level $BR holders can gain priority access, then $BR will start to bind with real protocol demand.

Thus, what Bedrock 2.0 truly aims to do is transition BTCFi from high-yield competition into the BTC asset management phase. Using uniBTC as the entry point, yield vaults as the strategy layer, BRclaw as the analysis layer, and $BR for access and incentives, this is how Bedrock 2.0 will make Bitcoin more productive.

The main reasons why a project party with a contract cannot pump the price are:

1. The project party has not configured an active market maker, but only set up some robots.

2. The project party does not have enough funds or does not want to use its own funds for market making.

3. There are too many external chips for the project party, resulting in the project party and market makers not being able to gather enough chips yet.

4. The main reason for the failure of market maker financing is the lack of chip concentration.

5. External selling or short-term unlocking by the project party has not yet ended.

6. The project party is still in the process of accumulating chips.

So when the project party says 'the car is too heavy,' it often corresponds to the six points above, and indeed many new coins do not pump, most likely because of (4).

From my personal perspective, especially for projects listed on #Binance spot + futures, as well as those on other first and second-tier exchanges, or grand slam projects, if it is a new coin, the probability of not pumping is very low, especially for projects that cannot print money themselves; even OTC needs to pump to sell.

Of course, some new coins have enough reserve funds and can temporarily ignore the price; at this point, it’s a test of endurance. Let me give an example: $ZAMA . When I bought it, everyone thought it was going to be abandoned, but now it has almost doubled, although I bought relatively little just for testing purposes.

Some projects actually pressure the other party every day or wait for the project party, which in turn will not pump the price. ZAMA has lost its heat, and no one is discussing it; it just started now.

Additionally, if the chips are not consistently gathered enough, it is indeed possible that this project will not move, after all, they have sufficient cash flow. It could be dragged until everything is fully unlocked.

10U War God applies for a battle, shorting CLUSDT (WTI), dual currency going long on BTC

Two weeks of ceasefire, two weeks of the Strait of Hormuz being open, likely coming to an end. BTC rises 📈

Recently, the USD1 activity has been ongoing, and it's been extended for another month. I don't know if it's because the structural bill is about to pass or if it's stimulated by $CRCL. USD1 is continuously using subsidies to gain user support. In this situation, having a stable income, with interest rates higher than investment products, is already quite good.