Hidden Leverage Risks Behind the AI Bull Run: US Margin Debt at $1.4T Record, KOSPI Triggers Circuit Breaker

News Editor

2026-06-30 02:31:29

Behind the global AI-driven bull market lies a massive leverage risk. US margin debt has reached a record $1.4 trillion, while leveraged ETF assets have doubled to $220 billion in just two months. South Korea's KOSPI index experienced sharp volatility and triggered a circuit breaker due to concentrated holdings and high leverage. Barclays and Morgan Stanley warn that leveraged derivatives could trigger a negative spiral of deleveraging, amplifying market downturns. Investors must remain vigilant against systemic risks from the combination of excessive leverage.

Staggering Leverage Data in US Markets

Riding the global AI frenzy, leverage in US stock markets has soared to historic levels. As of the latest data, margin debt on US exchanges stands at $1.4 trillion, a new all-time high. The assets under management in leveraged ETFs have doubled in the past two months to $220 billion. High leverage means that any market correction will trigger margin calls, accelerating the downward spiral.

KOSPI's Violent Swing and Circuit Breaker

South Korea's market also shows the danger of extreme leverage. The KOSPI index experienced dramatic swings due to concentrated positions and high margin usage, triggering a circuit breaker. This echoes the high-leverage environment in the US, revealing the fragile foundation of the AI bull run.

Institutional Warnings: Negative Deleveraging Spiral

Both Barclays and Morgan Stanley have issued warnings that leveraged derivatives could set off a negative deleveraging spiral. As prices fall, forced liquidations depress prices further, amplifying market losses. Investors should monitor leverage levels closely and prepare for potential systemic risks.

This article was originally published by Bit.Fan. For more cryptocurrency news and market insights, visit www.bit.fan.

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