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A technical breakthrough by Moonshot’s Kimi sparks an AI stock sell-off, while leveraged products amplify market volatility

MarsBitNews
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Mars Finance news: On July 19, according to Bloomberg, China’s AI startup Moonshot has made an unexpected technical breakthrough, triggering a sharp selloff in global AI and semiconductor stocks on Friday, and once again bringing the market’s attention back to the “DeepSeek moment” in 2025. Semiconductor benchmark indexes have cumulatively fallen about 20% from their June highs, entering a bear market; SOXL, the three-times leveraged semiconductor ETF, dropped more than 50% over the same period. This selloff shows that when AI technology advances rapidly shift the market’s judgment of winners and losers, leveraged ETFs, options, single-stock funds, and crypto-related products may all be forced to close positions. 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; after factoring in embedded leverage, their share of the U.S. stock market still remains below 1%. Although these products are limited in overall size, their holdings are heavily concentrated in AI chips, high-volatility stocks, and newly listed companies. When leverage, concentration, and volatility rise at the same time, a fund’s daily rebalancing could make it an active force for buying and selling, further amplifying existing market trends. A clear case has recently emerged in the Korean market. Local retail investors bought large amounts of leveraged products linked to Samsung Electronics and SK hynix; after market sentiment weakened, the relevant funds were forced to sell an estimated tens of billions of dollars’ worth of SK hynix holdings.
SOXL8.00%
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