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Key Takeaways
- Equity funds now account for a record 64.7% of the $72.9 trillion tracked by EPFR Global, reflecting historic risk-on positioning.
- Bitcoin fell 13.4% in Q2 while the Nasdaq 100 gained 27.7%, a sharp divergence from its usual high-beta stock-like behavior.
- Strategy’s $1.25 billion in Bitcoin sales and $4.9 billion in spot ETF outflows drove the quarter’s crypto-specific weakness.
Equity funds now account for a record 64.7% of the $72.9 trillion in assets tracked by EPFR Global, excluding commodities, as investors bet heavily on a “Goldilocks” economy of cooling inflation and resilient growth. Bitcoin sat out the rally entirely, falling 13.4% in the second quarter even as the Nasdaq 100 gained 27.7% over the same period, according to research from digital asset firm NYDIG.
Stock Funds Reach a Record Share of Global Assets
Societe Generale strategists led by Arthur van Slooten found that while bond and money market funds have drawn heavier inflows than equity funds this year, neither pace has matched the swelling pool of existing equity assets. The result is the most risk-on positioning fund investors have held on record, driven by cooling inflation readings and expectations that the Federal Reserve could turn more dovish after recent Consumer Price Index and Producer Price Index data showed easing price pressure.
Andrew Tyler, who leads JPMorgan’s Market Intelligence desk, summarized the mood in a note, saying the setup is “even better than Goldilocks could have imagined” for market bulls.
Little Room Left to Add
That positioning has left investors with limited capacity to keep buying. Bank of America’s fund manager survey shows cash levels sitting near historic lows, while Deutsche Bank data shows systematic funds are already heavily long equities. Trend-following commodity trading advisors have pushed equity exposure to the 72nd percentile of their historical range, and volatility-control funds have gone further, to the 91st percentile.
With most buyers already committed, Van Slooten and other strategists describe the current setup as stretched, leaving little obvious fuel for further gains even as corporate earnings season has started on solid footing.
Bitcoin Fell While Stocks Climbed
Bitcoin lost 32.9% year-to-date and 13.4% in the second quarter alone, according to NYDIG research led by Greg Cipolaro. The decline marks a sharp divergence from the rally in equities and breaks from Bitcoin’s usual tendency to trade like a high-beta technology stock.
Cipolaro noted that Bitcoin’s three-month correlation with the S&P 500 stayed elevated throughout the quarter, meaning the asset diverged in performance rather than decoupling from equities altogether.
Crypto-Specific Supply, Not a Broader Retreat From Risk
NYDIG’s research points to forces specific to Bitcoin’s own market rather than a broad pullback from risk assets. Strategy, the largest corporate holder of Bitcoin, authorized roughly $1.25 billion in Bitcoin sales during the quarter, a reversal that turned the market’s largest treasury buyer into a net seller. Spot Bitcoin exchange-traded funds shed $4.9 billion over the same three months.
Flows into those ETFs turned positive again in mid-July, and Bitcoin was trading near $63,871 as of the most recent data. NYDIG said a durable recovery would likely require both sustained ETF inflows and renewed growth in stablecoin supply, two demand signals that softened during the second quarter’s selloff.
What Would Change the Picture
The two markets currently sit at opposite extremes. Equity investors hold record exposure with little dry powder left to deploy, while Bitcoin trades well below its highs on thin, leverage-driven trading rather than sustained spot demand. Neither position offers an obvious next move: equities look stretched near the top of their range, and Bitcoin’s rebound so far lacks the spot buying needed to confirm a durable floor.
