The net exposure of the seven hedge fund giants has risen to a historic high of 22%, and crowded trading may exacerbate the risk of a market pullback

According to Hupzy, the current net exposure of hedge funds to the "Magnificent 7" in the U.S. stock market has risen to 22%, a record high, surpassing the peak of 21% on June 2024, and increasing by 7 percentage points since July of this year. In comparison, at the bottom of the bear market in 2022, this indicator was only 8%.

The record-long positions reflect strong confidence from institutions in technology stocks, but it also means that trading may be overly crowded and does not necessarily indicate that the market will continue to rise. If the relevant investment logic changes, large-scale liquidations could trigger a sharp reversal and directly impact the perpetual contract market for the S&P 500 index; a decline in risk appetite may also further pressure Bitcoin.

Additionally, the net exposure of hedge funds in the semiconductor sector is currently at 12%, slightly below the peak of 14% in June 2024, but significantly up from 2% at the beginning of 2025. Over the past three months, the increase in hedge fund exposure to the Magnificent 7 has been the largest since 2023.