The semiconductor sector just evaporated $2.2 trillion, yet retail investors are betting on a rebound with record-high funds. In July, the Philadelphia Semiconductor Index dropped about 21%, marking its worst monthly performance since October 2008. In just one month, global chip stocks lost approximately $2.2 trillion in market value. But this massive drop didn’t scare off retail investors—instead, it triggered an even larger wave of bottom-fishing. Over the past week, semiconductor ETFs saw a net inflow of about $12 billion, setting a new historical record. Although semiconductor ETFs account for only about 1% of total ETF assets, they absorbed roughly 25% of the new funds entering the ETF market over the past five trading days. To put it simply, for every $4 flowing into the ETF market recently, nearly $1 went into semiconductors. What’s even more notable is that the funds aren’t just buying regular semiconductor ETFs—they’re going all-in on triple-leveraged semiconductor ETFs. SOXL alone saw inflows of about $2.5 billion in a single week, the second-highest in history. Retail investors are no longer satisfied with simply bottom-fishing chip stocks—they’re using triple leverage to bet that July’s sharp decline is over and that semiconductors will see a rapid rebound. This explains why semiconductors experienced a quick rebound during U.S. trading hours last weekend, rather than during Korean trading hours. Last week, we all saw poor performance in the Korean stock market, but the reversal during U.S. trading hours was mainly due to ETFs receiving funds and needing to buy constituent stocks. For example, SOXL, in order to maintain its daily triple exposure, has to continue increasing risk positions when the market rises. The interplay between rising stock prices, ETF inflows, and leveraged product rebalancing can easily create a cycle of continuous mechanical buying. However, even with $12 billion in inflows, it’s hard to prove that semiconductors have hit bottom. It only shows that retail investors have placed significant bets that July’s decline has reached its lowest point and that semiconductors will rebound quickly. Of course, these are just retail bets, and whether this will actually happen is anyone’s guess. But if semiconductors drop again, the daily rebalancing of leveraged ETFs, volatility decay, and investor stop-losses could amplify selling pressure. The mechanical buying that drives stock prices up could quickly turn into mechanical selling. @Gate Crypto, U.S. stocks, Hong Kong stocks, Korean stocks, gold, CFDs, prediction markets all in one place.