Phyrex Says U.S. Investors Are Chasing Stock Highs With Rising Leverage

Crypto KOL Phyrex said on X that U.S. investors are chasing stock market highs with increasingly high leverage. According to ChainCatcher, net credit balances at U.S. brokerage accounts fell by about $70 billion in June to negative $1.061 trillion, a record low, while margin debt rose by about $86 billion to $1.53 trillion, marking a third straight monthly increase and a new record.

Phyrex said the deterioration in net credit balances suggests smaller cash buffers and greater reliance on borrowing to hold stock positions. He added that leverage is widespread across the U.S. brokerage system. In rising markets, higher share prices can lift account equity and unlock more borrowing capacity, creating mechanical buying. If markets weaken, margin pressure could force investors to add cash or sell stocks, turning the leverage that helped drive gains into mechanical selling. He said U.S. stocks currently face both high valuations and elevated financing, and that slower new money inflows could amplify market volatility.