Crypto traders lose $52M on chip-stock perps in 10 minutes with Wall Street shut
In brief
- About $51.6 million in chip-linked positions were force-closed between 21:22 and 21:32 UTC, per CoinGlass.
- Long positions, or bets on higher prices, made up roughly $38 million of the liquidations.
- SOXL contracts took the biggest hit at about $12.7 million.
- Binance was where the selling started, according to a review by Tread.fi CEO David Jeong.
- With stocks closed, the contracts had no real share price to follow.
What got liquidated
About $51.6 million in positions tied to chip stocks and semiconductor funds were force-closed between 21:22 and 21:32 UTC, according to CoinGlass data reported by CoinDesk. Most of it was longs. Roughly $38 million came from traders betting on higher prices.
SOXL (a fund that triples the daily moves in chip shares) took the biggest hit at about $12.7 million. SanDisk and SK Hynix contracts each saw about $10.8 million in liquidations, per the same CoinGlass figures.
The mechanism is simple. A trader who borrows to make a bigger bet gets closed out automatically when losses eat through their deposit, and that forced selling can push prices lower still.
Where it started
The selling started on Binance, according to a review of the trades by David Jeong, chief executive of trading firm Tread.fi. The first large SanDisk and Micron sell orders landed on Binance at 21:21:59 UTC.
Less than a second later, orders hit Hyperliquid, the crypto exchange where Trade XYZ lists stock-tracking contracts, and roughly 10 addresses opened bets against six chip-linked contracts within 1.8 seconds. Binance carried far more of the early SanDisk trading, though. It handled about $21.9 million of SanDisk trading in that first minute, against $3.1 million on Trade XYZ.
No stock price to lean on
This is the part that matters.
With the stock market shut, there was no real share price for these contracts to follow, so traders were reacting only to each other. Trade XYZ's rules let trading on the platform set its own reference prices until outside stock quotes come back.
Memory-chip shares were already coming off a rough week, CoinDesk noted, as investors weighed new competition from Chinese chipmaker CXMT. That was the backdrop heading into the weekend.
Outside quotes return when U.S. markets open Monday. That's when traders will see how far Saturday's prices strayed from where the shares actually trade.
Frequently asked questions
What are stock perpetual futures on crypto exchanges?
They're contracts that track a stock's price and trade around the clock on crypto exchanges. Traders can use borrowed money to make bigger bets, and they get closed out automatically when losses eat through their deposit.
Why did chip-stock contracts move while Wall Street was closed?
With the stock market shut, the contracts had no real share price to follow, so traders reacted only to each other. Trade XYZ's rules let trading on the platform set its own reference prices until outside stock quotes return when U.S. markets open Monday.
