J.P. Morgan Private Bank is bullish on four US stock sectors amid the ongoing capital expenditure trend.

Abigail Yoder, an equity strategist at the financial giant, says in a new analysis that the bank is positive on financials, industrials, information technology, and utilities and energy infrastructure.

Yoder notes financials are in a good place to absorb market volatility.

“Large, high-quality banks remain well positioned in the current rate environment, which we describe as ‘higher-for-longer but stable.’ Net interest margins continue to benefit from elevated rates and a steepening yield curve. Resilient credit fundamentals and strong capital positions support earnings durability and downside resilience.”

In terms of industrials, Yoder says defense spending, infrastructure buildout, AI-related capex and reshoring initiatives are all driving structural demand.

“Money is moving into a range of capital-intensive industries, from power equipment and construction to various types of advanced manufacturing. Together, they illustrate the breadth and depth of the industrial cycle.”

The strategist notes that information technology has been the core driver of S&P 500 earnings.

“Recent valuation compression reflects macro volatility and not a deterioration in fundamentals. As we’ve discussed, we see a bright outlook for tech earnings, underscoring the sector’s role as a central pillar of growth and innovation in the U.S. economy.”

Finally, Yoder says utilities and energy infrastructure are increasingly exposed to structural demand.

“Electrification, AI-driven power consumption and grid modernization are shining a spotlight on the economy’s need for long-term energy investment and the sector’s strong earnings prospects.

Forecasters project that electricity demand will exceed current generation capacity over the coming years… A sustained supply-demand imbalance will support companies’ pricing power. We think it will also underpin a multi-year investment cycle across electricity generation, transmission and grid infrastructure.”

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Bitcoin’s drop toward $60,000 last week exposed how quickly a shift in investor appetite can turn into forced selling when leverage has been rebuilt beneath the surface of the crypto market.

The largest cryptocurrency by market value fell nearly 14% last week, triggering almost $10 billion in liquidations of long futures as traders who had bet on higher prices were pushed out of the market.

Bitcoin later recovered to about $63,000, but the rebound did little to settle the debate over what caused one of the year’s sharpest sell-offs.

Market commentary from Charles Schwab and NYDIG points to a broader explanation. Capital has been rotating toward artificial intelligence, private technology deals, and other high-growth trades at the same time that futures positioning in Bitcoin has become more crowded.

AI becomes the rival trade to Bitcoin

Bitcoin’s latest weakness has unfolded as investors reassess where the strongest speculative returns are coming from.

In a note shared with CryptoSlate, Jim Ferraioli, head of crypto research and strategy at Charles Schwab, said crypto investors have repeatedly shifted toward the market’s dominant momentum trade.

That pattern has played out across precious metals, oil futures during the Iran conflict, memory stocks, and private investment vehicles linked to future IPOs.

In recent months, artificial intelligence has taken that role.

The scale of spending tied to AI has drawn capital across listed equities, data-center infrastructure, and private markets. For investors who once used Bitcoin as a primary way to express a high-growth technology view, AI has become a direct competitor for attention and liquidity.

Strategy Executive Chairman Michael Saylor pointed to that pressure last week after Bitcoin’s decline. He said about $400 billion had flowed into AI infrastructure over the past six months, while US-listed spot Bitcoin ETFs had seen roughly $4 billion in outflows since mid-May.

The contrast underlined the challenge facing Bitcoin. The top crypto is no longer competing only with gold, other digital assets, or macro trades. It is being measured against an AI cycle that has become the main growth story across financial markets.

Greg Cipolaro, global head of research at NYDIG, also identified AI as one of several forces weighing on Bitcoin and the broader crypto market.

His argument centered on the overlap between the two investor bases. According to him, both sectors appeal to investors seeking exposure to emerging technologies, large markets, and high return potential.

As AI-linked stocks have continued to outperform, capital has moved toward the stronger trade.

That shift is also visible in private markets. Investors are already positioning for a potential wave of major technology listings, with companies such as SpaceX, OpenAI, and Anthropic viewed as eventual public-market candidates.

These large offerings can prompt institutions to raise cash or reduce existing positions before committing to new allocations.

For Bitcoin, the result is weaker marginal demand at a difficult point in the cycle. The network’s adoption story has not clearly broken down, but price action has softened as investors compare crypto with a technology trade that currently offers stronger momentum.

Leverage turns rotation into liquidation

Meanwhile, the retreat from Bitcoin became more severe because traders had rebuilt risk in derivatives markets before the selloff began.

Ferraioli said the move reflected a market where leverage had returned, even if positioning was still below the excesses seen in earlier periods. He noted that futures open interest had dropped to about $31 billion in February after reaching a high of roughly $70 billion. By May, it had recovered to about $51 billion.

That recovery showed traders had moved back into leveraged exposure as Bitcoin regained ground. Once the market turned lower, those positions became a source of pressure.

According to him, almost $10 billion in long futures positions were liquidated last week as prices fell, forcing traders who had bet on further gains to close out. The decline in open interest during the selloff suggested that exposure was being removed from the market rather than replaced with fresh positions.

Funding rates also moved back toward negative territory, showing that the long bias that had built up during the recovery had started to unwind. Ferraioli said liquidations relative to overall open interest pointed to a moderate forced reduction in positioning.

That helped explain why Bitcoin’s decline accelerated. The rotation toward AI-linked assets, ETF outflows, and hedge fund selling weakened demand. Then, BTC traders’ derivatives positioning magnified the pressure once prices began moving lower.

In a leveraged market, selling can become automatic. Traders facing margin pressure are forced out of positions regardless of whether they still believe in the longer-term Bitcoin thesis. That process can push prices lower until enough exposure has been cleared.

The shift also showed how quickly Bitcoin’s support structure changed. ETF inflows and improving sentiment had helped the market earlier in the year. By late May, those flows had weakened while futures exposure had expanded.

Ferraioli noted that hedge funds were the main source of selling after Bitcoin peaked in early May. That pullback also aligned with the drop in futures open interest.

By May 31, hedge funds had cut their share of BlackRock’s iShares Bitcoin Trust, or IBIT, to about 19% from around 29%. Investment advisers moved the other way and added exposure during the decline, while retail brokerage accounts also reduced holdings.

The split pointed to a market where longer-term allocators were willing to buy weakness, while more tactical investors moved to reduce risk as momentum broke down.

A flush, Not Yet a Bottom

In view of the above, Ferraioli said the latest price action points to a market clearing out leverage rather than adding a new wave of speculative exposure.

According to him, the market signals are moving in the same direction. Open interest has declined, liquidations have surged, and funding rates have slipped toward negative territory.

Together, those measures suggest traders have been cutting long exposure after positioning became stretched during Bitcoin’s rebound from February levels.

That still leaves the market short of a confirmed bottom as forced liquidations can happen near the end of a selloff, but they can also appear in the middle of a broader decline. However, they do not prove that selling pressure has been exhausted on their own.

Ferraioli said liquidations need to be read alongside open interest and funding rates. A more constructive setup would require open interest to stop falling, funding to stabilize, and forced selling to fade.

If leverage builds again before spot demand recovers, the market could remain exposed to another round of pressure.

Meanwhile, some technical and cost-based levels suggest the BTC decline may be nearing an exhaustion zone.

Ferraioli noted that Bitcoin has returned to areas around its February lows, efficient miner production costs, and the 200-week moving average. Traders often watch those levels for signs that distress selling is slowing and longer-term buyers are beginning to reappear.

The question is whether those support levels can compete with the broader rotation into AI and private technology. Bitcoin’s recovery to about $63,000 showed demand had returned after the liquidation wave, but weaker ETF flows and hedge fund selling continue to weigh on the market.

The next stage will depend on whether fresh capital moves back into crypto. If AI-linked equities, infrastructure deals, and expected technology listings continue to attract the marginal dollar, Bitcoin may struggle to regain momentum even after a major leverage reset.

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A Goldman Sachs tech specialist thinks one sector of the market looks particularly exciting amid historic stock gains.

Peter Callahan, a telecom sector specialist, says in a new interview that US internet stocks have lagged software this year and haven’t received enough attention.

“There are ongoing debates about sources of funds, about ongoing investment cycles, about the health of the consumer, and of course, where AI in the consumer world goes over the next couple of years. But as of late, you’re starting to see a little bit more innovation from the product side on US internet companies tied to AI.

The temperature on the consumer seems to be coming down as oil prices have reset off the highs. And so given that backdrop and cleaner positioning, I’ll be watching the US internet sector from here.”

Callahan also outlines what investors should track when looking at semiconductor stocks, which are having their best year in decades.

“I think for semiconductors, listen, it’s been a great start to the year. I think any time a group’s up 80% like it is in five months, there’s of course– you have sort of these momentum dynamics. You have too far, too fast.

You have all that type of stuff that kind of matters over the short term. But I think over the medium term, what really matters is earnings revisions, right? And as long as you are getting earnings revisions for this group, which helps keep multiples in track, I think investors will be comfortable adding to this group on pullbacks or momentum unwinds or different pockets of positioning pressures that can show up, of course, when you have moves like this.

So I think at the end of the day, just keep tracking the earnings growth and I’ll do my best to keep this group informed.”

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