Crypto news

The world's largest hedge funds have accumulated a record volume 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 technology giants.

Such alarming forecasts were simultaneously voiced by leading financial sector players Goldman Sachs and JPMorgan. 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 Trades

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% — the highest in the last five years. A memo from Goldman trader Lee Coppersmith, circulated in June, states that net leverage has risen 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 significantly increased. Such shock scenarios, according to the value-at-risk indicator, typically materialize when volatility exceeds the internal limits of funds. This forces managers to urgently liquidate positions.

The JPMorgan analyst team prepared a visual comparison of companies' market shares:

Such a high concentration of capital makes the artificial intelligence sector extremely vulnerable. Consequently, any local 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 their portfolios after a successful rally. Japan's GPIF pension fund, with assets of $1.9 trillion, is the largest seller, accounting for about $60 billion.

Pension funds in the U.S. 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 upcoming pressure in a state of heightened nervous tension. New Fed Chairman 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 investor 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. Currently, many miners are 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 towards the lower boundary of the psychological range of $60,000.

The cryptocurrency is now behaving like a highly volatile tech stock, completely losing its safe-haven properties. The price has trended downward amid the hawkish rhetoric from the FOMC and mixed quarterly reports from AI industry leaders. If the wave of institutional sell-offs coincides with the 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 volumes of capital will determine the further direction of stocks and cryptocurrencies in the coming weeks.

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Expert opinion: The situation in traditional markets is directly projected onto cryptocurrencies, destroying the myth of their isolation. Investors should prepare for increased volatility at the end of the quarter and consider current levels as a high-risk zone, rather than an entry point without regard for the macroeconomic backdrop.