Chip Stock Bets Lost $52 Million in 10 Minutes While Wall Street Was Shut

Traders betting on chip stocks lost about $52 million in ten minutes on Saturday night, even though Wall Street was closed. About $51.6 million in leveraged positions tied to chip stocks and semiconductor funds were force closed between 21:22 and 21:32 UTC on Saturday, October 17, according to CoinGlass data reported by CoinDesk on Sunday, October 18. About $38 million of the total came from long positions, the bets that prices would rise.

Bets that trade while the stock market sleeps

The bets were placed through perpetual futures, contracts that track the price of a stock or a fund and trade around the clock on crypto exchanges. They have no expiry date. A trader puts down a deposit and borrows to make the bet bigger. When losses eat through that deposit, the exchange closes the position on its own. That forced selling can push prices lower and trigger the next round of closures.

Because the contracts never close, they keep trading on Saturday night when the shares they track are not trading at all. There is no live share price to follow, so the contract price is set by the traders in the room, buying and selling against each other.

Ten minutes on Saturday night

The selling started on Binance and spread to Hyperliquid within seconds, CoinDesk reported. David Jeong, chief executive of the trading firm Tread.fi, said he placed the first large sell orders for SanDisk and Micron on Binance at 21:21:59 UTC. Less than a second later, orders hit Hyperliquid, where Trade XYZ lists stock tracking contracts. About 10 addresses opened bets against six chip contracts within 1.8 seconds. Binance handled about $21.9 million of SanDisk trading in the first minute, against $3.1 million on Trade XYZ.

SOXL took the largest hit. The fund is built to deliver three times the daily move in chip stocks, and about $12.7 million in SOXL contracts was closed out. SanDisk followed at about $10.8 million and SK Hynix at about $10.7 million, counting its two tickers together. Contracts betting against chip stocks, the SOXS fund, still lost about $9.1 million, and Micron lost about $4.4 million, according to the per contract figures published by Odaily and Crypto Briefing from CoinGlass data.

A hard week for memory chips

Memory chip stocks had already come through a hard week. Traders were weighing new competition from Chinese chipmaker CXMT, and chip shares fell hard in Asia on Friday, October 16. No single cause for the Saturday drop was identified in the first reports, Crypto Briefing noted.

Monday will show the gap

Trade XYZ rules allow trading on the platform to set the reference price until outside stock quotes return. Those quotes return when US markets open on Monday, October 19. Only then can traders see how far the weekend contract prices moved away from where the shares themselves trade.