Investor Sentiment Surges to 5-Year High, Cash Levels Fall to 3.9%

Investor sentiment surged in July to its most bullish since February, driven by a big jump in profit optimism and record risk appetite, according to Bank of America's global fund manager survey. Cash levels fell to 3.9%, triggering a "sell signal." BofA suggests investors are more likely to engage in sector rotation rather than making a significant retreat.

Investor sentiment surged in July to its most bullish since February, driven by a significant increase in profit optimism and record risk appetite, according to Bank of America's global fund manager survey. Cash levels fell to 3.9%, triggering a "sell signal." Bank of America suggests investors are more likely to engage in sector rotation rather than making a significant retreat [1].

The July 2025 edition of Bank of America's survey reveals that investor confidence is at its highest level since the beginning of the year. This optimism is reflected in the significant reduction of cash holdings, which now stand at 3.9% of total assets. This decrease in cash levels is often seen as a "sell signal" by financial analysts, indicating that investors are becoming more comfortable with taking on riskier assets.

The survey also highlights that investors are more likely to engage in sector rotation rather than making a significant retreat from the market. Sector rotation involves shifting investments between different sectors of the economy based on their expected performance. This strategy can help investors to capitalize on the strengths of various sectors while avoiding potential weaknesses.

The bullish sentiment is also evident in the crypto derivatives market, where open interest volumes hit historic highs. According to BeInCrypto, Bitcoin's futures trading volume last week was over 10 times its spot trading volume, and the total crypto market open interest reached a new all-time high of over $187 billion on July 14 [2].

The increase in risk appetite and the decrease in cash levels suggest that investors are more willing to take on higher risks in pursuit of higher returns. This trend is likely to continue as long as the market conditions remain favorable.

References:

[1] https://finance.yahoo.com/news/earnings-watch-bank-america-bac-030045726.html

[2] https://beincrypto.com/altcoins-at-risk-of-major-liquidations-july/