Goldman Sachs and JPMorgan warn: the stock market is heading for a "perfect storm" with a $165 billion sell-off
The world's largest hedge funds have accumulated a record amount of borrowed capital in recent years. Analysts at leading investment banks warn that a massive portfolio rebalancing 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 technology giants.
Leading players in the financial sector — Goldman Sachs and JPMorgan — simultaneously issued alarming forecasts. Representatives of both banks see a common serious threat. Excessive leverage, combined with a high concentration of investor bets, will inevitably amplify the market decline when mechanical selling is triggered.
Rising Leverage in Overheated AI Deals
According to Goldman Sachs' fund division, leverage in the industry has been growing for over a year. In June 2025, the total leverage of hedge funds reached approximately 294% — a five-year high. Net leverage, according to a Goldman trader's memo, rose to four-year highs.
JPMorgan strategist Nikolaos Panigirtzoglou heightened the alarm. He noted that bets on the semiconductor sector are so overheated that the likelihood of new waves of selling has increased significantly. Such shock scenarios, according to the value-at-risk indicator, typically materialize when volatility exceeds funds' internal limits. This forces managers to urgently liquidate positions.
The JPMorgan analyst 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 a high concentration of capital makes the artificial intelligence sector extremely vulnerable. Consequently, any localized deterioration in sentiment among major players could trigger an avalanche-like 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 total, while balanced investment funds will offset approximately $15 billion.
Global markets are facing the impending pressure in a state of heightened nervous tension. New Fed Chair Kevin Warsh maintained current monetary policy parameters following the June meeting. 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 quotes. 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. In 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 FOMC rhetoric 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 intensify significantly 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 zone of maximum fragility. The combination of record leverage, overheated AI stocks, and forced portfolio rebalancing creates the conditions for one of the largest sell-offs in recent years. Bitcoin, having lost its correlation with safe-haven assets, will come under pressure first — its current support at $60,000 could be tested in the coming days.