Global investment bank Goldman Sachs has projected a massive stock sell-off by U.S. pension funds, interpreted as a portfolio readjustment.
Analysts from Goldman Sachs’ FICC (Fixed Income, Currency, and Commodities) and Equity team stated on the 31st (local time) through an investment note that “We expect pension funds to sell off stocks worth $32 billion in the process of portfolio readjustment.”
According to Goldman Sachs, this is the largest adjustment since June last year and represents the 89th percentile of estimates over the past three years.
There are various views on pension flows on Wall Street. However, the general view is that it can put additional pressure on the market when trading volume is low before and after Easter. After the S&P 500 index surged by about 26% since the end of last October, traders have expressed concerns that positions are increasing and stocks are more vulnerable to short-term profit-taking.
Goldman Sachs analyzed that “Institutional investors and pension funds have strict asset allocation limits and often review market exposure at the end of the month and quarter. The S&P 500 index has risen 8.8% since the beginning of this year, and global bonds have fallen about 2%, so funds may need to sell more stocks than usual.”
Jinzu, a former analyst at Binance Research, emphasized the potential impact this situation could have on the Bitcoin spot ETF market.
Jinzu diagnosed, “The impact of the end-of-quarter rebalancing of large funds has become clear as stocks that previously showed a large uptrend face selling pressure. Rebalancing could generate significant demand for the Bitcoin ETF launched in January.”
Rebalancing involves selling appreciated assets and buying assets that have declined in value. Typically, actual rebalancing trades are scheduled for early April. Therefore, the Bitcoin ETF has not experienced any inflows due to rebalancing over the past two weeks.
According to data from cryptocurrency analysis firm Glassnode, the total amount of Bitcoin stored in exchanges has dropped to about 12% of the total circulation, the lowest level in the past five years. The movement away from exchanges has traditionally been considered a bullish indicator, indicating a preference for holding over selling.
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