Investors who have ridden the dazzling rally in small-cap darlings such as DroneShield and Life360 have been delivered a dose of reality this week after a series of ASX announcements triggered a violent reversal on the sharemarket.

DroneShield shareholders were left stunned by news overnight that company founder Oleg Vornik and a group of directors had sold almost $70 million worth of stock, sending the shares plunging 30 per cent.