Market Sentiment Shift Sparks Record Outflows

According to BlockBeats, a sudden shift in risk appetite has been identified as the primary cause of recent market declines. Within a few days, market sentiment swung dramatically from extreme greed to extreme fear, leading to polarized positioning and a complete reversal in market mood. It is noted that regardless of fundamentals, sentiment ultimately drives market prices. The rapid change in sentiment has resulted in unprecedented outflows, triggering what is described as a 'flash crash.' Data indicates that institutional capital withdrew from tech stocks before their decline. As 2025 progresses, hedge fund holdings in the seven major U.S. stocks, known as the Magnificent 7, have dropped to their lowest level in 22 months. In the last week of February, cryptocurrency funds experienced record weekly outflows of $2.6 billion, surpassing the previous record set in 2024 by approximately $500 million.