South Korea’s July 13 equity rout exposed how quickly leverage tied to individual technology shares can turn a stock-market decline into a crypto-style liquidation event. The KOSPI fell 8.95% in one session, its seventh circuit-breaker trigger of 2026, as heavily traded semiconductor names collapsed and automated selling accelerated the drop.
SK Hynix lost 15.37% during the session, while Samsung Electronics fell by more than 10%. The moves came after retail demand poured into newly approved 2x single-stock leveraged exchange-traded funds linked to the two companies, leaving a large share of the market exposed to daily rebalancing and margin pressure.
Brokerages issued margin calls to more than 1.2 million leveraged accounts, according to the reported figures. Automated systems liquidated an estimated 320,000 to 460,000 accounts, with people aged 20 to 30 accounting for 62% of forced-liquidation cases. Total forced liquidations were reported at 2.3 trillion won.
The episode places the focus less on whether stocks or crypto are inherently more volatile, and more on how leverage can reshape the behavior of any market. A concentrated trade in a handful of high-profile technology names, paired with products designed to magnify daily returns, created conditions in which a normal selloff could rapidly become mechanical deleveraging.
Leveraged ETF demand intensified the semiconductor selloff
South Korea approved 16 single-stock 2x leveraged ETFs on May 27, 2026, covering companies including Samsung Electronics and SK Hynix. From their approval through mid-July, retail traders made net purchases of 14 trillion won in single-stock leveraged ETFs, according to the figures provided. Foreign participants bought about 2 trillion won over the same period.
The products seek to deliver twice a stock’s daily return, rather than twice its longer-term performance. That distinction becomes especially costly during volatile trading.
If a share falls 10% and then rises 11.1%, it returns to its starting price. A 2x leveraged product would decline 20% on the first day and gain 22.2% on the second, leaving it about 2.2% below its opening value. Repeated swings can compound that erosion even if the underlying stock ends a period largely unchanged.
During a sharp decline, the funds may also need to reduce exposure to maintain their targeted leverage. That means selling can be dictated by the structure of the product rather than by a fresh view on Samsung’s earnings, SK Hynix’s chip demand, or the wider economic outlook.
Goldman Sachs said ETF-related liquidations accounted for 62% of institutional net selling during the event. The bank described the rapid deleveraging from these products as a main driver of abnormal intraday KOSPI moves.
South Korean regulators subsequently halted new single-stock leveraged ETF listings and raised the minimum margin requirement to 30 million won from 10 million won. The revised rules require cash-only collateral, limiting the ability of traders to build positions with borrowed funds.
Tech shares fell faster than Bitcoin in reported drawdown comparisons
The speed of the semiconductor losses fueled comparisons with digital-asset markets, where sharp daily swings have long been part of trading culture. On reported peak-to-trough timelines, several technology-linked equities fell 50% or more far faster than Bitcoin.
Bitcoin took 268 days to decline 50% from its high, according to the comparison. Silver took 169 days for a similar retracement. SanDisk fell about 55% in 36 days, while SK Hynix fell roughly 53% in 34 days.
Those figures do not establish that equities are generally riskier than crypto. They show that a narrow group of popular technology stocks can suffer exceptionally fast losses when expectations, positioning and leverage all move in the same direction.
Statistics attributed to Charles Schwab for 2025 point in the same direction for selected U.S. names. Bitcoin’s historical volatility was estimated at about 42%, with a maximum drawdown near 32%. Tesla recorded about 63% historical volatility and a 48% maximum drawdown, while Nvidia posted approximately 50% volatility and a 37% maximum drawdown.
A separate 2026 outlook from Bitwise projected that Bitcoin’s overall volatility could remain below Nvidia’s. The comparison reflects a changing market backdrop in which some mega-cap technology shares carry concentrated exposure to artificial intelligence, semiconductor supply chains and momentum-driven trading.
Deleveraging risks extend beyond Seoul
JPMorgan analysts said U.S. equities retained “deleveraging space” and estimated that it could take three months for positioning to return to levels seen before April. The bank also found that assets in leveraged storage-chip stock ETFs represented a share of underlying market capitalization three times the average for stock ETFs.
The ratio for broad leveraged equity-index ETFs was also elevated against its own history, JPMorgan said. Such products do not automatically cause market crashes, but their growth can amplify a move once volatility rises. Daily reset mechanisms tend to require purchases after advances and sales after declines, linking fund flows more tightly to short-term price direction.
The concentration of trading around technology themes has also been visible in China. In the first half of 2026, TMT—technology, media and telecommunications—companies reached 41.78 trillion yuan in market capitalization, equal to about 31.45% of the total A-share market value, according to the figures supplied. On some sessions, technology stocks accounted for almost half of all market turnover.
That concentration leaves index performance and market liquidity increasingly dependent on a small set of narratives and companies. When the leading theme weakens, traders are often selling positions that are widely owned, highly correlated and sometimes financed with borrowed money.
The KOSPI’s July collapse offers a particularly stark example of the feedback loop. Falling semiconductor stocks damaged leveraged funds and margin accounts; fund rebalancing and forced liquidations then created more selling in the same shares. For market participants accustomed to treating 10% to 15% single-day swings as a cryptocurrency phenomenon, Seoul showed that the same mechanics can emerge in listed equities when leverage becomes central to the trade.
To understand leveraged crashes and avoid liquidation risks, explore crypto liquidation mechanics and smarter risk-control tactics.
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