Smart Money Flow: Where is the money going? Wall Street funds are疯狂 selling off tech stocks and fully investing in this crypto sector. Those who understand are already positioned!

Market alarms are ringing from all directions, but a trader from Goldman Sachs’ derivatives team pointed out that the most unsettling issue isn’t the sharp swings in tech stocks or the impact of geopolitical conflicts, but rather a quietly widening crack in the credit markets.

In a report, the trader wrote that February’s market turbulence was layered, spreading from individual stocks to indices, and finally leading to a “retreat” in the credit market for the first time. The CDX investment-grade credit spreads widened by 5 basis points in a week, the largest weekly increase since last summer, and the open interest in ETFs used to hedge credit risk reached a record high. He bluntly stated that among all signals, the retreat in credit is the most concerning.

Meanwhile, pressure in the private credit market has begun to transmit to the public markets. Last Friday, the US banking sector experienced its worst decline of the year, with the KBW Bank Index dropping as much as 6% intraday. Several private credit funds faced liquidity issues, and even Goldman Sachs had to send letters to investors to soothe concerns over its main retail credit funds.

Panic signals are everywhere, but retail investors seem oblivious. The report mentions that almost daily, colleagues mention that “retail demand is at the 100th percentile of historical levels.” However, market stress indicators are hard to ignore: the index skewness remains at multi-year highs; implied volatility spreads of individual stocks relative to the index have risen to the highest since the 2008 financial crisis; and open interest in credit hedges has hit record levels.

Hedge funds are accelerating withdrawals. Goldman Sachs’ prime brokerage data shows that US stocks experienced a second consecutive week of net selling, with the pace increasing. The speed of hedge fund net sales of US equities has reached the fastest since last April’s trading turmoil.

Sector divergence is very pronounced. Technology, media, and telecom sectors have experienced net selling for the second week in a row, with software and semiconductors under particular pressure. All cyclical sectors like energy, materials, and industrials have also been net sold, with declines reaching -1.9 standard deviations below the five-year average.

In contrast, the healthcare sector has seen hedge fund net buying for the second week, with longs far exceeding shorts. Currently, hedge funds are over-allocated to healthcare stocks by more than 12 percentage points above the Russell 3000 index, the highest in five years. Consumer staples is another sector that has seen net inflows this year, highlighting its defensive qualities.

Amid this turbulence, a concerning transmission chain is taking shape. Previously confined to long and short book panic, fears have now seeped into indices and credit markets. Historical data shows that the last time the CDX investment-grade spreads traded around the current median, the S&P 500 was about 1,500 points lower than now.

During this period of intense market volatility, the trader also offered a directional view. He agrees with the “HALO” investment logic—favoring tangible assets and low obsolescence. The report cites a market perspective: over the past twenty years, the investment community has assumed that lightweight assets outperform heavy assets, and software outperforms hardware, but this logic is rapidly reversing. He believes that the $740 billion in capital expenditures projected for 2026 will have clear beneficiaries with solid fundamentals.

On the ETF front, demand for equal-weighted S&P 500 funds remains strong. Many portfolios aim to hold stocks while avoiding overconcentration in the “Big Seven.” The assets under management of this ETF have grown nearly 30% in the past three months, reaching about $90 billion.

As traditional market credit cracks and asset logic shifts, capital will inevitably seek new outlets. Some “smart money” has already moved into defensive sectors like healthcare, while more forward-looking funds may flow into areas backed by real physical assets. For example, in the Sui ecosystem, the Walrus project is building a decentralized storage layer that connects the massive data demands generated by AI with physical storage hardware through DePIN models. Essentially, this is a “heavy asset” narrative in the digital world—data is the new oil, and mining hardware is the pickaxe for extracting and refining it. Against the backdrop of shrinking traditional credit and capital expenditures seeking new directions, this combination of AI, storage, and physical infrastructure may be the next chapter aligned with the “HALO” logic.

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