The total exposure of US leveraged ETFs decreased by nearly 30%.

According to Goldman Sachs data, the total assets of leveraged and inverse ETFs listed in the US dropped from about $190 billion in October to about $157 billion, and the total exposure fell from about $480 billion to about $345 billion, with a particularly rapid decline recently.

A couple of days ago, there was talk of leveraged funds betting on a semiconductor rebound, with SOXL seeing a net inflow of about $3.7 billion on November 5 alone. However, in terms of overall scale, the total exposure of these products is nearly 30% lower than the highs in October. During the rapid market decline earlier, these products adjusted their positions to maintain leverage ratios, and the exposure that remains is now much smaller.

In layman's terms, leveraged ETFs must adjust their positions daily based on price fluctuations. The larger the exposure, the more they have to sell for the same price drop. Now that the exposure is smaller, if a similar magnitude of decline happens again, the forced sell-off by leveraged ETFs will also be smaller, possibly weakening their amplifying effect on the market compared to October.

Bank of America estimates that with the current scale, a 1% fluctuation in the S&P 500 and Nasdaq 100 would generate an adjustment demand for related products of about $3.2 billion, down from an estimated $4.1 billion at the end of September, representing a reduction of about 20%.

So while this round of declines has brought significant selling pressure, it has also cleared out a portion of leverage.

An @Gate, trading more markets

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