Hedge Funds Hit by $20B Tech Selloff as Nasdaq Falls
Hedge funds suffered their worst weekly performance since 2024 as worries over AI spending and financing weighed on technology stocks. Goldman Sachs said its prime brokerage unit recorded about $20 billion in technology-stock selling over two weeks, alongside the biggest cut in gross single-stock exposure since late July.
Systematic long-short hedge funds fell 2% last week, their steepest weekly loss since 2024, while fundamental long-short funds declined 1.1%. The Nasdaq 100 dropped 5.5%, its sharpest weekly fall since April 2025. Meta shares lost about 10% despite strong earnings after the company signalled it would need more capital for AI infrastructure.
The pullback reflects investor concerns about high valuations, borrowing costs and whether large AI infrastructure investments will generate sufficient returns. Hedge funds remained up for the year, but rapid position reductions by systematic strategies could add to volatility if technology stocks continue to fall. The tech selloff may also influence broader risk sentiment, including crypto markets.
Bearish
The news is bearish for near-term risk sentiment. A sharp Nasdaq decline, substantial technology-stock selling and hedge funds cutting exposure point to reduced appetite for growth assets. Concerns about AI infrastructure costs and financing could prompt investors to reassess highly valued companies, while systematic funds may sell further if price trends weaken. These dynamics can spill over into crypto, which often responds to changes in liquidity and broader risk appetite, although the article reports no direct cryptocurrency selling or crypto-specific catalysts.
Similar risk-off episodes have often brought higher volatility across equities and digital assets as traders reduce leverage and seek safer positions. In the short term, crypto traders may watch equity-market momentum, fund flows, funding rates and liquidations for signs of contagion. If selling in technology stocks stabilises and AI spending concerns ease, the pressure could fade. Longer term, the implications are less clear: a technology-sector correction could weigh on speculative assets, but any eventual easing in financing conditions or renewed risk appetite could support a recovery. This is an indirect market signal, not evidence of a fundamental change in crypto assets.