Breaking! Momentum strategy collapses in the fifth week, leveraged ETFs cut in half—where is the last straw for $BTC and $ETH ?

Let’s talk about something that will send a chill down your spine.

In his weekend notes, Goldman trader Benny Quek tore open a layer of window dressing—global stock markets’ current calm is an illusion. Beneath the surface, a momentum strategy machine is actively coming apart. For five straight weeks, the momentum factor has been falling, and leveraged ETFs are undergoing a historically severe unwind. The most typical case is South Korea: the size of leveraged ETFs has been slashed in half from a peak of $53 billion, and the share of exposure relative to free-float market value has dropped from 3.3% to 2.1%. In addition, Samsung and SK hynix’s daily rebalance flows as a proportion of daily average trading volume have fallen from 40% and 26% to 15% and 14%, respectively. KOSPI has closed lower for five consecutive weeks—this trend makes Quek think of China’s CSI1000 in 2014–2015. You judge it, take a closer look.

The U.S. market also isn’t stable. A hedging setup that is long high-momentum and short low-momentum saw a single-day plunge of 8% last Friday. Although the week still managed a modest gain of 4%, that volatility range already exposed the fragility of positioning. From “fear of missing out” to “fear of holding,” it only takes five weeks.

The AI narrative is also shifting. Market attention has moved from headline stories about capital expenditures to the more troublesome core questions: profit margins, return on investment, and debt. From the start of the year to now, the amount of bond issuance related to AI has reached $489 billion, with 40% coming from mega-scale cloud vendors—1.5 times the predicted annual volume. Meanwhile, these cloud vendors’ credit spreads have been widening rapidly. The S&P 500 market cap has increased by $3.1 trillion since December 2022, while Goldman’s baseline scenario for AI’s potential value is $310k; the optimistic case is $90k, and the blue-sky case is $2.8 trillion. At current prices, the market has already priced in the vast majority of upside.

Positioning hasn’t been fully cleared. Quek explicitly said he doesn’t think the AI, tech, and momentum-strategy positions are in a “clean” state that meets market expectations. He is highly alert to the high volatility in the third quarter—his own approach is a dumbbell strategy, with defensive assets paired with selected aggressive positions. Compared with S&P 500 constituents, individual stocks’ volatility has surged, but implied correlation remains at extremely low levels. This provides a structural rationale for going long stock index volatility: once correlation rebounds, index volatility will be amplified. Goldman’s risk appetite indicator is still at high levels, and market sentiment hasn’t fully reflected these risks.

However, rotation has already begun in Asia. Indonesia’s composite index JCI rebounded 16% from the low. India has seen the region’s strongest monthly foreign inflows. Money is moving out of high-momentum, high-valuation sectors toward defensives and value. The relative valuation of software versus semiconductors has broken above the 50-day moving average, and internal rebalancing is underway. Gold is showing signals too: CFTC gold futures open interest is increasing—historically, this indicator leads spot gold prices. In China, June gold import volume rose to a two-year high.

Quek also reminded that with U.S. midterm elections approaching, the market will see more headline-driven volatility. Historical data shows that U.S. stocks typically trade sideways before midterm elections, and only strengthen after the vote. But before that happens, how long will the momentum chase last? Nobody dares to promise.

Geopolitical conflict, oil prices, interest rates, tariffs—four forces are pouring into the market to compete for pricing power. Can your $ETH and $BTC truly stand alone?

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