Viewpoint: The expectation of a US economic recession leading to a shift in risk appetite is the reason for the recent decline in US stocks and cryptocurrencies

BlockBeats news, on March 11th, according to The Kobeissi Letter analysis, the real reason for the market downturn is the sudden shift in risk appetite. In just a few days, the market went from extreme greed to extreme fear. The positioning is so polarized that market sentiment has turned in completely opposite directions. Regardless of the fundamentals, emotions are the ultimate driving factor for any market price When emotions rapidly change, the outflow of funds will reach a historical high and trigger the 'flash crash' we see. Data shows that institutional capital exited before the decline in technology stocks. By 2025, hedge fund holdings in the seven major US stocks (Magnificent 7) will drop to their lowest level in 22 months. In the last week of February, the outflow of cryptocurrency funds reached a record high of $2.6 billion. This is about $500 million higher than the record set in 2024.