Welcome to the New Crypto World: This Time, the Losing Place is the Stock Market

Written by: Dou Wan Liao

On July 13, 2026, in Seoul.

The KOSPI, South Korea's composite index, plummeted 8.95% in a single day, marking the seventh circuit breaker of the year. SK Hynix, regarded as a "national fortune stock" by Koreans, fell 15.37% in one day, a drop not seen in nearly twenty years. Samsung Electronics also dropped by over 10%.

More than 1.2 million leveraged accounts received margin call notifications, and brokerage systems automatically liquidated between 320,000 to 460,000 accounts. Even more heartbreaking, 62% of those who faced liquidation were young people aged 20 to 30, with some losing their wedding home down payments and others borrowing to trade stocks...

A young man in his twenties in Busan, having lost money due to following a stock YouTuber's recommendation, went directly to stab that influencer with a knife.

These words, once likely used to describe scenes after a major crash in the crypto world, are now being replayed in the markets of South Korea, the United States, and Japan after the tech stocks' decline.

The dramatic rises and falls are merely the surface; the real change lies in the pricing mechanisms, where narratives overshadow valuations, leverage amplifies emotions, and social media pushes consensus to extremes.

Global stock markets, especially tech stocks, are increasingly resembling the crypto world.

Returning to the Original Family

"Welcome back to the original family."

After the crash, crypto traders who turned to the stock market began writing about their losses, and the above comment could be seen everywhere in the comment sections.

The so-called "original family" refers to cryptocurrencies. From the second half of 2025 to early 2026, a grand drama of "leaving the original family" unfolded in the crypto world.

A group of KOLs and seasoned players who had been navigating the cryptocurrency market for years began to lose faith in it. Bitcoin was stagnant, trading volumes were sluggish, and meme coins were being cut time and again. Many felt that "this circle has lost its charm" and began to shift their attention to U.S. stocks.

This choice seemed quite reasonable.

Stocks have income, profits, financial reports, and SEC regulation. Compared to crypto projects that lack cash flow and rely entirely on consensus pricing, U.S. stocks at least resemble a more mature and safer asset.

Crypto traders took not only liquidity but also their trading methods with them.

In the crypto market, they were used to chasing new narratives, seeking high-elasticity targets, using leverage, and quickly changing positions based on social media sentiment. Upon entering the stock market, this method changed little, with the only difference being that the trading targets shifted from tokens to AI, storage chips, and leveraged ETFs, repeatedly yielding significant results.

Storage stocks quickly became the new collective consensus.

The logic is not complex: AI servers require more high-bandwidth memory, HBM is in short supply, storage prices rise, and Micron, Samsung Electronics, and SK Hynix naturally become the most direct "sellers of shovels." Sun Ge's phrase "there will always be a shortage of storage" has deeply resonated. Many crypto KOLs transformed, starting to discuss U.S. stocks, the storage cycle, and AI capital expenditures. Doubling down on products like SK Hynix was also seen as a more "efficient" betting tool than ordinary stocks.

Until the market reversed in July.

Bitcoin Became a "Low Volatility Asset"

How long does it take to fall by half from the peak?

Bitcoin took 268 days, while silver completed a similar pullback in 169 days.

In contrast, SanDisk fell about 55% in just 36 days, and SK Hynix dropped about 53% in only 34 days.

Both experiencing a "halving," Bitcoin took nearly nine months, while storage stocks only took a little over a month.

This is the paradox of the current market: in the past, investors worried that Bitcoin would surge or plummet within days, while stocks adjusted slowly based on earnings and valuations; now, some tech stocks are completing a full cycle of bubble bursting in a shorter time than cryptocurrencies.

Counterintuitively, compared to some tech stocks, Bitcoin is becoming relatively stable.

Charles Schwab's statistics show that Bitcoin's historical volatility in 2025 was about 42%, with a maximum drawdown of about 32%; during the same period, Tesla's volatility was about 63%, with a maximum drawdown of 48%, and Nvidia's volatility was about 50%, with a maximum drawdown of 37%.

Bitcoin remains a high-risk asset, but some large tech stocks are more volatile.

Bitwise even predicted in its 2026 outlook that Bitcoin's overall volatility might continue to be lower than Nvidia's.

So the current situation is quite absurd: Bitcoin is increasingly resembling tech stocks, while tech stocks are becoming more like Bitcoin.

When Narratives Become Valuation Anchors

There is an old saying in the crypto world: trading cryptocurrencies is about trading narratives.

In 2026, global tech stocks are turning this saying into reality.

AI is certainly not just hot air; Nvidia, Microsoft, Google, and large cloud computing companies have real revenues and are investing real money in building data centers.

However, there is a long way from "AI will indeed create value" to "any company associated with AI is worth buying at any price."

During the hottest market periods, this road was directly omitted by the market.

AI servers, optical modules, storage chips, data centers, power equipment, and even nuclear energy companies can see their stock prices rise rapidly as long as they can be included in the AI industry chain. The business is still in planning, and orders have yet to materialize, but the market will price it based on the best results years down the line.

The story in Korea is "AI semiconductors relate to national fortune." As the KOSPI continues to hit new highs, more and more families are opening stock accounts for their underage children, treating popular stocks like Samsung Electronics and SK Hynix as long-term gifts.

A-shares have also seen similar concentration. In the first half of 2026, the TMT sector's market capitalization reached 41.78 trillion yuan, accounting for about 31.45% of the total A-share market capitalization; on some trading days, the trading volume of the tech sector approached half of the entire market.

The U.S. market has long priced around a few large tech companies. As the index's gains increasingly depend on a handful of companies, when funds, options, and retail investors all flood into the same stocks, what appears to be a diversified portfolio is actually betting on the same AI story.

This is quite similar to the crypto world of the past; the surge of Dogecoin in 2021 was not due to technological breakthroughs but because Musk tweeted. The surge of tech stocks in 2026 is also not because all companies are performing explosively, but because ChatGPT made everyone believe that "AI will rewrite everything."

The rapid dominance of narratives in the market is also inseparable from changes in communication methods.

In the past, stock information mainly came from financial reports, research reports, and institutional roadshows. Today, more and more people's investment decisions come from YouTube, X, short videos, and paid communities.

Complex company research is compressed into a few sentences: Time will prove that computing power and optical modules, AI computing power will always be insufficient...

Social media algorithms do not reward caution; getting rich overnight is always the key to traffic: some people double their money overnight through options, some workers achieve financial freedom by heavily investing in storage stocks, and some make several years' salary in just a few months using leveraged ETFs.

K-lines are the best publicity, and many mothers and grandmothers are starting to invest their private savings, with some even selling houses to trade stocks, just like a few years ago when a group of students dropped out to go all in on Web3...

Leveraged Frenzy

The most terrifying aspect of the crypto world is not volatility but the deadly combination of leverage and volatility, and the global stock market in 2026 is perfectly replicating this.

On May 27, 2026, the Korean exchange approved the listing of 16 leveraged ETFs linked to individual stocks, with the underlying assets being Samsung Electronics and SK Hynix.

Retail investors went wild. From the approval until mid-July, Korean retail investors cumulatively net bought 14 trillion won (about 640 billion yuan) of single-stock leveraged ETFs, while foreign investors only bought about 2 trillion won during the same period.

These ETFs have several fatal designs.

These products readjust their positions daily. The more volatile the market, the more apparent the net value loss. Suppose a stock first drops by 10% and then rises by 11.1%; the stock price can return to its original point; however, the corresponding 2x leveraged product would first drop by 20% and then rise by 22.2%, ultimately still losing about 2.2%.

The problems become even more severe during rapid declines.

To maintain the target leverage, the product needs to passively reduce its risk exposure after a decline. Selling will further depress the underlying price, and the price drop will trigger more liquidation, stop-loss, and margin pressure.

Goldman Sachs later pointed out that the "rapid deleveraging" of these products was the main reason for the KOSPI's abnormal volatility during the day, with 62% of institutional net selling coming from ETF-related liquidations.

Two months later, Korean regulators urgently halted the listing of all new individual stock leveraged ETFs, raising the minimum margin from 10 million won to 30 million won, and only cash is accepted.

But it was too late; 2.3 trillion won in forced liquidations led to the evaporation of the wealth of hundreds of thousands of families.

Even the world's deepest U.S. stock market is experiencing the backlash of leverage.

J.P. Morgan analysts recently pointed out that the U.S. stock market still has "deleveraging space" and needs three months to recover to the levels before April.

The scale of leveraged ETFs in storage chip stocks compared to the market capitalization of the underlying assets is three times the average level of all stock ETFs. Even the overall leveraged stock index ETFs are at a high relative to their historical levels.

A Regression

The "stock market becoming like the crypto world" does not mean that stocks are completely the same as cryptocurrencies.

Stocks still have companies, assets, revenues, and cash flows behind them, as well as financial disclosures, audits, and regulations. Even when market sentiment wanes, a genuinely profitable company still possesses calculable value.

The real change lies in the trading layer.

In the past, people bought a company's future profits; now, more and more people are trading on the heat of a theme.

The stock market's crypto-ization is essentially a revolution of de-rationalization.

Traditional stock markets look at PE ratios and cash flows, while crypto-ized stock markets look at narratives and imagination; a volatility of 20% is considered high in traditional stock markets, while a single stock's daily volatility of 10% to 15% is the norm in crypto-ized stock markets.

Traditional stock market leverage comes from margin trading, while crypto-ized stock markets use ETFs, derivatives, and quantitative strategies; traditional stock market information comes from research reports and financial statements, while crypto-ized stock market information comes from Twitter, YouTubers, and communities; traditional stock market institutions price rationally, while crypto-ized stock markets are institutionalized and retail-driven, with quantitative strategies chasing highs and lows...

Even more absurdly, Bitcoin is now trying to become more like stocks, through ETFs, institutionalization, and decreasing volatility, gradually being accepted by mainstream finance.

This is an absurd intersection.

Those who transitioned from the crypto world to the stock market ultimately find that they have not left their "original family"; it is a mechanism that keeps repeating: grand stories, crowded positions, easily obtained leverage, and everyone believing they can exit before others.

The words written by Korean retail investors on trading forums are worth remembering by all: I want to return to the days before trading stocks and get my money back.

But the market never issues refunds.