Goldman Sachs and JPMorgan warn: a $165 billion correction is brewing in the market
Leading global hedge funds have accumulated a record amount of borrowed capital in recent years. JPMorgan analysts warn that a massive portfolio reshuffling at the end of the quarter could trigger a sell-off of securities worth up to $165 billion. This situation significantly increases the risks of sharp fluctuations in the value of overheated tech giants.
At the same time, representatives from Goldman Sachs and JPMorgan have issued alarming forecasts. Both banks see a common serious threat. Excessive leverage combined with high concentration of investor bets will inevitably amplify a market downturn when mechanical selling is triggered.
Rising Leverage in Overheated AI Trades
According to data from Goldman Sachs' fund division, leverage in the industry has been growing for over a year. In June 2025, total hedge fund leverage reached approximately 294%—a five-year high. In a June internal memo from Goldman trader Lee Coppersmith, it was reported that net leverage rose to four-year highs.
JPMorgan strategist Nikolaos Panigirtzoglou heightened concerns. He noted that bets on the semiconductor sector are so overheated that the likelihood of new waves of selling has significantly increased. Such shock scenarios, based on the value-at-risk indicator, typically materialize when volatility exceeds funds' internal limits. This forces managers to urgently liquidate positions.
JPMorgan's analytics team prepared a visual comparison of companies' market shares:
| Market Sector Comparison Indicator | Semiconductor Companies | Big Seven Tech Giants |
| Stock value exceeding revenue share | More than 6 times | 3 times |
Such high capital concentration makes the artificial intelligence sector extremely vulnerable. Consequently, any localized deterioration in sentiment among major players could trigger a cascading correction.
Causes and Consequences of the Expected $165 Billion Sell-Off
The main trigger now is the mechanics of quarterly rebalancing. According to JPMorgan's calculations, in the final days of June, institutional players could sell up to $165 billion in stocks to adjust portfolios after a successful rally. Japan's GPIF pension fund, with $1.9 trillion in assets, is the largest seller, accounting for about $60 billion. U.S. pension funds are expected to offload another $55 billion. Structures in Norway and Switzerland will add several tens of billions to this sum, while balanced investment funds will offset approximately $15 billion.
Global markets are facing the upcoming pressure in a state of heightened nervous tension. New Fed Chair Kevin Warsh, following the June meeting, maintained current monetary policy parameters. Nevertheless, the head of the agency openly acknowledged the possibility of a new round of tightening before the end of the year. The Federal Reserve's hawkish stance quickly cooled investors' hopes for an imminent easing of conditions. Undoubtedly, this factor triggered an additional wave of turbulence on exchanges.
What This Means for Bitcoin
The overall vulnerability of the traditional financial sector has naturally affected the flagship crypto asset as well. JPMorgan analysts note that the blockchain's hashrate has become much more dependent on the coin's market price. This phenomenon directly points to a dangerous trend. Many miners are now operating on the edge of equipment profitability, which amplifies the overall instability of the digital segment.
Bitcoin is holding positions around $64,100 with a market cap of about $1.29 trillion. Over recent weeks, the coin has repeatedly corrected toward the lower boundary of the psychological range of $60,000. The cryptocurrency is now behaving like a highly volatile tech stock, having completely lost its safe-haven properties. The price has trended downward amid the hawkish rhetoric from the FOMC and mixed quarterly reports from AI sector leaders.
If the wave of institutional sell-offs coincides with a crisis of excessive leverage, the financial storm will significantly intensify by the end of the calendar month. The ability of buyers to absorb such massive capital flows will determine the further direction of stocks and cryptocurrencies in the coming weeks.
Expert Opinion: The market has entered a phase of heightened fragility. The intertwining of record debt leverage, quarterly rebalancing, and the Fed's hawkish stance creates a "perfect storm." For the crypto market, this means that Bitcoin could temporarily lose its status as a safe-haven asset and decline alongside tech giants if liquidity begins to sharply contract.