My personal opinion on one of the driving forces behind the selloff outside of geopolitical issues is..
Retail (especially in Korea and the U.S) keeps buying the dip & keeps buying these leveraged ETFs on the dip hoping for the bottom.
The problem is.. When retail aggressively buys the dip, it populates the bid side of the order book. The market making algorithms look at this retail bid volume as an opportunity to dump larger block trades without causing large slippage. Retail is being used as exit liquidity for institutions and market makers to get better prices on the way down.
This problem is amplified with the dip buying of these leveraged ETFs (especially in the states & Korea) and mixed with the current Gamma negative environment has created a downward spiral that feeds on itself.
I think we’ll have a relief rally or bounce during this sell off but I think the sell off only really stops in either or both of two scenarios assuming geopolitical events don’t improve..
1.) Retail exhaustion or capitulation which means retail runs out of cash or margin, and stops buying the dip, and panic-sells, causing a final volume spike (liquidation flush).
2.) Large institutional entry when the institutions finish their deleveraging and value and fundamental buyers step in with size that outweighs the mechanical selling size.
TLDR: Retail is fuelling the sell-off by dip buying especially dip buying leveraged ETFs.