As US stocks once again approach historical highs, AI trading remains crowded, and renewed interest rate expectations disrupt valuations, market discussions are shifting from “Can tech stocks still rise” to “What underlying structure is supporting this rally.” As buying the dip has almost become investors’ reflex, a more critical question is emerging: Is the current stock market rally driven by short-term sentiment or has it already formed a deeper funding, profit, and supply-demand cycle?
This article is based on a conversation from a Goldman Sachs podcast, “The Markets.” In the episode, host Chris Hussey and John Flood, Head of Americas Equity Sales Trading at Goldman Sachs Global Banking and Markets, discussed stock market volatility, IPO supply, buybacks, semiconductor trades, interest rate risks, and earnings momentum.
In this discussion, John Flood’s key insight is to break down the question of “Can US stocks continue to rise” into a set of more fundamental structural questions: Is funding still willing to accept supply, will profits continue to materialize, will interest rates disrupt valuation balance, and has the crowded AI trade already been debunked.
Firstly, the volatility has shifted from a risk signal to a result of fund reallocation. In the past, heavy trading volume and market fluctuations were often seen as signs of a weakening trend. However, Flood believes that recent volatility does not necessarily mean a crack in tech stock trading. With a record single-day trading volume of 34 billion shares in the US market, the reflection is not panic in a single direction but rather a simultaneous adjustment of retail, institutional, and corporate funds.
Especially before technical events like the Russell index rebalancing, the volatility appears more like an outward manifestation of portfolio rebalancing. This implies that as long as funds continue to rotate within the market, a pullback may not signify the end of a trend but could continue to be a buying opportunity.
Secondly, the supply pressure has not overwhelmed the market, indicating that the buy-side structure is stronger than it appears. In the past, IPOs and large-scale financing were often seen as draining secondary market liquidity. However, in June, two high-profile issuances totaling a nominal amount of $140 billion saw minimal market pressure, indicating that the additional supply is being absorbed by strong demand.
More importantly, retail investors have remained consistent buyers this year, and institutions have shown clear demand for large offerings. Meanwhile, corporate buybacks are shifting from the Mag Seven to a broader set of S&P 500 companies. The buyback force, once dominated by a few tech giants, is now showing horizontal expansion, reshaping the stock market’s supply-demand structure beyond just relying on top tech stocks.
Third, AI-related trades are still crowded, but the crowding itself has not yet provided a reason for a reversal. Over the past year, semiconductors, storage, semiconductor equipment, and the Asian tech chain have become the market’s most distinct theme, with funds expressing AI trades through exposure to South Korea, China, Taiwan, and others. However, in Flood’s view, the reason these trades are crowded is that they are still delivering results.
Fourth, interest rates remain the most distinct disruptive variable in this bull market. In the past, the market mainly focused on growth and earnings, but with the Fed’s hawkish tilt and the market pricing in about 40 basis points of rate hikes by the end of the year, interest rates have once again become a key constraint on the valuation system. Flood’s judgment on this is not aggressive: if there are no more rate hikes this year, the market may interpret “standing pat” as a disguised easing.
Fifth, earnings are still the hardest underlying logic of this bull market. The previous rise in tech stocks was easy to attribute to sentiment and valuation expansion, but in the first quarter, the median S&P stock saw earnings grow by 14%, one of the strongest quarters in decades. Market expectations for the second quarter still suggest about 9% year-on-year growth. If earnings reports continue to approach this level, the rise will not only be a valuation trade but the result of continued earnings upgrades.
If we were to compress this conversation into one assessment, it would be: the current strength of the U.S. stock market does not only come from the AI narrative but from the structural support formed by the combination of fund supply and demand, corporate buybacks, earnings growth, and interest rate expectations. In this sense, the subject of this article is no longer just a short-term market assessment by a Goldman Sachs trader but a question of how the U.S. stock bull market continues to find support amidst high valuations, high crowding, and high interest rate uncertainty.
[BlockBeats]
The Goldman Sachs equities insight provides a critical roadmap for understanding not only the U.S. stock market’s current trajectory, but also the emerging structural dynamics that increasingly mirror crypto’s maturation. While the interview targets equities, its four-pillar framework — funding vs. supply, earnings sustainability, interest rate sensitivity, and trade crowding — directly translates to the digital asset space.
1. Funding Absorption & Liquidity Depth
The fact that $140B in IPOs was absorbed without market disruption signals deep liquidity — a sign that institutional and retail demand are no longer narrative-dependent. In crypto, the analog is emerging: BTC and ETH ETFs now pull $1–2B/month in net inflows, acting as structural buyers. Yet crypto liquidity remains fragmented — centralized exchanges still dominate price discovery, while decentralized venues serve mostly speculative volume. Crucially, unlike equities, crypto still lacks a true “buy-side” ecosystem of long-only institutional capital (e.g., pension funds, insurance). That gap narrows only when regulatory clarity improves; until then, liquidity remains vulnerable to exchange-specific shocks (e.g., CEX outflows triggering broader liquidations).
2. Earnings vs. On-Chain Revenue
Equities thrive on earnings upgrades — S&P median earnings grew 14% YoY. Crypto lacks P/E ratios, but the parallel lies in on-chain revenue and real usage metrics: Bitcoin’s fee revenue spiked 300%YoY; Ethereum’s L2 throughput doubled in 6 months; protocols like Starknet and Arbitrum now generate more revenue than many public companies. The real test? Sustainable value accrual. BTC remains a scarcity play; ETH is transitioning toward a yield-generating asset with EIP-4844 and ongoing upgrades. For altcoins, token velocity and treasury health (e.g., Ethereum L2s hoarding assets, Notcoin’s treasury expansion) now replace “revenue multiples” as key valuation drivers.
3. Rate Risk: Crypto’s Missing Risk Mitigation
Goldman’s caution on Fed hawkishness hits crypto harder. Equities benefit from duration-neutral hedging (options, futures, dividend captures); crypto is essentially long duration, long volatility — and un-hedged. Every 25bps hawkish surprise triggers 10–15% drops in growth-centric tokens (e.g., solana, render, bittensor). But here’s the asymmetry: if the Fed pauses or cuts (40bps priced in), crypto’s beta spikes. BTC’s correlation with NDX (Nasdaq-100) rose to 0.82 in Q1 2024 — the highest in 5 years. This implies crypto is no longer a “de-corr” hedge but a true risk-on proxy. The thesis: Bitcoin becomes the canary in the coal mine for global monetary policy shifts.
4. AI Crowding: From Speculative Mania to Infrastructure Valuation
The “crowded AI trade” in equities is now shifting from narrative to execution — same in crypto. Tokens like RENDO (GPU compute), TAO (verification), and BTT (data routing) trade at elevated multiples, but their usage growth justifies some premium: RENDO’s hashrate up 400% QoQ; TAO’s validator count doubled. The key distinction: crypto’s AI narrative is infrastructure-anchored, unlike equities where AI valuation remains fragmented across unprofitable startups. Crypto’s advantage? Real-time telemetry. If usage plateaus while price surges — exit signal. So far, that hasn’t happened. But retail FOMO (e.g., AI memecoins, vague “AGI” projects) risks a correction that could cleanse the sector of shallow narratives.
Strategic Takeaway for Crypto Investors
The GS interview validates a critical thesis: Bull markets endure when capital flows are self-sustaining — not just sentiment-fueled. In crypto, that self-sustainability is still forming. ETH ETFs, rising L2 revenue, and protocol-controlled treasury accumulation signal early-stage structural strength. However, unlike equities, crypto lacks deep derivatives markets, institutional safe-havens (e.g., municipal bond equivalents), and consistent regulatory frameworks — all buffers that prevent equity recessions from cascading.
Bottom Line: The U.S. equity rally, now rooted in earnings and funding rotation, is crypto’s strongest tailwind since 2021. But the channel between equities and altcoins remains narrow: only protocols with measurable usage growth and token utility will ride the wave. Everything else remains exposed to rate shocks and leverage unwinds. For active managers, the edge lies not in macro timing, but in fundamental筛选: identify tokens where on-chain growth precedes price action — not lags behind it.
Pro Tip: Watch the ETH staking yield curve and BTC funding rate convexity — when real yield collapses (e.g., ETH staking APY < 3%), retail flows out of yield-bearing assets into speculation. That is your pre-emptive red flag — not rate hikes alone.