The momentum trade, that beloved strategy of buying whatever is already going up and hoping it keeps going up, just reminded everyone why it has a body count. A basket of 50 stocks popular with retail traders has fallen 13% in July alone, according to Bloomberg, marking the steepest monthly decline for the group since 2022.

And that’s the gentler number. A separate tracker maintained by Jefferies, focused on Russell 1000 companies with high retail ownership, shows a plunge of more than 25% since June. For the retail crowd that spent the first half of the year piling into high-beta names like Robinhood Markets and Marvell Technology, the reversal has been swift and unforgiving.

The anatomy of a momentum crash

Momentum strategy returns for retail traders are now at their lowest point in four years. The traders Bloomberg describes as the “staunchest bulls,” the YOLO crowd that thrives on conviction and leverage, have been the hardest hit.

The Bitcoin connection, sort of

Back in early June, Bitcoin began losing its status as a momentum asset, with capital flowing instead toward AI-related equities. That rotation itself was a signal that the market’s appetite for momentum was shifting, even if no one drew a direct line between Bitcoin’s cooling and what would eventually happen to retail stock favorites.

What this means for retail investors

The 25% decline in the Jefferies retail-ownership basket since June is a reminder of what concentration risk looks like in practice. A diversified index doesn’t drop 25% in seven weeks unless something truly systemic is happening. A basket of crowded retail favorites absolutely can.