2026 July Market Variation: US Stock AI Bubble Cools, Crypto Assets Approach Bottom Rebound

At the start of July 2026, global capital markets experienced a sharp style shift. Influenced by multiple factors such as the US June nonfarm payroll data falling significantly short of expectations and AI giants' capital expenditures facing scrutiny, the US stock market saw a clear "great rotation" phenomenon; at the same time, the cryptocurrency market, which had undergone a deep correction earlier, also ushered in an opportunity for a bottom rebound.

US Stocks: AI Profit Expectations Tested, Funds Rotate Toward Cyclicals and Safe-Haven Assets

The US stock market at the beginning of July showed a significant divergence. On one hand, the Dow Jones Industrial Average hit a new record high against the backdrop of cooling nonfarm data and declining expectations of Fed rate hikes; on the other hand, previously high-flying tech stocks and AI giants faced substantial capital selling.

Currently, the biggest point of contention in the US stock market is the "AI profit bubble." In the first half of this year, driven by AI and semiconductor stocks, US stocks recorded their best half-year performance in years. However, as the Q2 earnings season is about to begin, market concerns about "whether expectations have overextended reality" are also heating up. Wall Street analysts predict a 25% surge in S&P 500 component earnings next year, but this expectation has been revised upward by nearly 20% over the past six months, marking the largest increase since 2021. Some institutions warn that the current pricing of the AI industry chain already implies the assumption of "sustained abnormal profits," and if high spending fails to translate into actual profits, it could easily trigger a valuation correction.

In addition, signals from tech giants shifting from "scale competition" to "efficiency first" have also triggered a chain reaction in the market. For example, Meta publicly admitted that its AI research and development progress fell short of expectations and sold idle computing power, directly leading to a collective re-pricing of the semiconductor sector.

Faced with high valuations and uncertainty, top global institutions have started to reposition uniformly, with funds showing a clear trend of "abandoning growth, embracing value." Institutions like Bank of America recommend reducing positions in AI giants and increasing holdings in traditional cyclical industries such as finance, energy, and raw materials. Meanwhile, precious metals like gold, as core cross-market hedging assets, have shown strong safe-haven and anti-decline properties under the dual logic of fund diversion and a weakening US dollar, becoming rare gainers in the market.

Cryptocurrencies: Farewell to "Red June," Institutional Fund Inflows Boost Bottom Rebound

In contrast to the adjustment in US tech stocks, the cryptocurrency market, which had previously struggled extremely, found respite at the start of July. After a plunge of more than 20% in June, Bitcoin briefly hit a 21-month low, but quickly recovered ground at the beginning of July, reclaiming the key support level of $60k.

The rebound in crypto assets this round is mainly due to improved expectations for macro liquidity. Weak US employment data reduced the probability of further Fed rate hikes, providing a favorable environment for risk assets. At the same time, positive signals emerged on the funding front: after a 10-day period of net outflows totaling approximately $2.7 billion, Bitcoin spot ETFs saw inflows of over $200 million at the start of July, ending the previous sustained bleeding.

Despite the short-term rebound, mainstream institutions remain cautious about the crypto market. Wall Street giants like Citigroup have recently sharply lowered their price targets for Bitcoin and Ethereum, believing that institutional allocation remains stagnant amid negative ETF fund flows and AI computing power thematic assets siphoning funds. However, some research firms (such as 21shares) maintain "cautious optimism" about the outlook for the second half of the year, arguing that as the number of wallets holding Bitcoin continues to grow, Bitcoin could recover to the $100k mark by year-end.

Conclusion

Currently, global capital is seeking safe havens anew. The US stock market is at a critical juncture for verifying AI bull market profits, and the trend of funds flowing from high-valued tech stocks to undervalued blue chips and safe-haven assets is unlikely to reverse in the short term; while the cryptocurrency market has experienced a technical repair, its long-term trajectory still awaits clarity on macro policies and sustained institutional capital inflows. In the current market environment, investors may need to preserve ammunition and cautiously navigate the upcoming style shifts and volatile conditions.

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