Two of Wall Street's biggest banks are ringing alarm bells over excessive risk in financial markets. Goldman Sachs and JPMorgan both warned this week that hedge fund leverage has hit multi-year highs, raising the odds of a sharp pullback. JPMorgan estimates that mechanical quarter-end rebalancing could trigger a $165 billion stock selloff before June ends — and the crypto market isn't immune.
The leverage math
Goldman's prime brokerage data shows gross hedge fund leverage reached about 294% in June 2025, a five-year high. Net leverage hit four-year highs in June 2026. Those numbers mean funds are borrowing heavily to amplify bets, leaving them exposed if prices turn. JPMorgan's strategist Nikolaos Panigirtzoglou specifically called out semiconductors: their share of global equity value is now over six times their share of revenue, more than double the comparable ratio for the Magnificent Seven. Stretched positioning there, he said, raises the risk of more frequent selloffs.
Where the $165 billion comes from
The selloff estimate isn't a prediction of panic — it's mechanical. Pension funds and sovereign wealth funds rebalance quarterly. Japan's GPIF is the biggest seller at roughly $60 billion. US public pension funds add about $55 billion, while Norway's and Switzerland's funds chip in tens of billions more. Balanced mutual funds would offset roughly $15 billion in buying, but the net flow out of equities is still massive.
Crypto caught in the crosscurrents
Bitcoin traded near $63,620 this week, with a market value around $1.28 trillion — sliding toward the low $60,000s in recent weeks. The move mirrors tech stocks, not safe havens. JPMorgan flagged that Bitcoin's hash rate has grown more sensitive to price, a sign more miners are operating near breakeven. That adds fragility to the crypto market, the bank noted. The Federal Reserve under Chair Kevin Warsh held rates in June and hinted at a possible hike later this year, repricing rate-cut bets and lifting volatility across asset classes.
What comes next
The rebalancing window closes June 30. If the selloff materializes on schedule, risk assets from semiconductors to Bitcoin could feel the pressure. Goldman and JPMorgan aren't calling a crash — but they're making it clear the safety margins have thinned.
