Hedge Funds Dump Tech Stocks at Fastest Pace in a Decade

The broader backdrop points to more than routine profit-taking. Alongside reducing technology holdings, hedge funds have increased bearish positioning on the wider market to the highest level seen in a decade, according to the prime brokerage data. That shift reflects growing caution toward risk assets rather than isolated stock selection.

The macro implications could extend into digital assets if institutional risk appetite keeps deteriorating. Many high-beta crypto assets historically move alongside broader market liquidity conditions. Under a prolonged risk-off environment, capital typically rotates away from speculative sectors first.

That leaves decentralized AI projects particularly exposed. AI infrastructure, compute, and agent-focused networks such as Bittensor (TAO), NEAR Protocol (NEAR), Render (RENDER), and the Artificial Superintelligence Alliance (FET) could face additional pressure if institutional investors continue reducing technology exposure. These assets may be forced to retest long-term structural support levels should liquidity continue to tighten, the data suggest.

Hedge fund net exposure to US tech has dropped by nearly 10 percentage points relative to overall US exposure, wiping out most of this year's position gains. The eight-week aggregate reduction is the largest in at least a decade, surpassing even the pace seen during the 2022 bear market.

The move has reignited debate over whether enthusiasm surrounding artificial intelligence has pushed valuations beyond what underlying earnings can currently support.