U.S. equities face a potentially sharp imbalance between remaining systematic buying capacity and downside selling risk this September, according to a Bank of America analysis cited by Coin Bureau.

Bank of America estimates that systematic funds have only about $9 billion of additional buying capacity if stocks continue to rise, while a market decline could trigger as much as $163 billion in selling from commodity trading advisers and volatility-control strategies. The gap represents an 18-to-1 imbalance between potential downside selling and remaining upside demand.

Systematic funds, also known as quant or rules-based strategies, allocate capital according to pre-set models that respond to signals such as price trends and realized volatility rather than discretionary judgment. Because these models rebalance automatically, their collective behavior can amplify market moves in both directions, particularly when many strategies react to the same signals at once.

Systematic Funds Could Amplify a September Selloff

The estimates highlight how market positioning can itself become a source of additional volatility when investment strategies respond mechanically to changes in prices and volatility.

According to Bank of America's calculations, systematic strategies would have limited room to add equity exposure if markets extend their gains. By contrast, a significant decline could prompt trend-following and volatility-targeting strategies to reduce positions, potentially creating additional selling pressure.

The $163 billion figure represents a scenario rather than a forecast of actual transactions. The potential flows would depend on the magnitude and speed of any market decline, as well as how individual systematic strategies respond to changing market conditions.

The timing also coincides with a stretch of the calendar that has historically drawn attention from market observers: September has been one of the weakest months on average for U.S. equities, a seasonal pattern documented in long-run market data, though past performance in any single month is not a reliable guide to outcomes.

The warning comes against a backdrop of growing caution among investors. Reuters reported that U.S. equity funds recorded their second consecutive weekly outflow in the week ended September 2, with investors withdrawing $11.12 billion as higher bond yields and geopolitical tensions weighed on risk appetite.

Buyback Blackouts Remove Another Source of Demand

Corporate share repurchases could provide less support during the period as companies enter buyback blackout windows ahead of earnings announcements. Blackout windows typically begin in the final weeks of a fiscal quarter and extend until shortly after earnings are reported, restricting companies from repurchasing their own shares to avoid trading on material non-public information. That matters because buybacks have been an important source of underlying equity demand, particularly when other market participants become more cautious.

The combination of limited systematic buying capacity and reduced corporate demand creates a more asymmetric market structure. A decline would not automatically produce a $163 billion liquidation, but a sufficiently large move could activate selling programs that reinforce the initial downturn.

For cryptocurrency markets, the development is also relevant because Bitcoin and other digital assets remain closely linked to broader risk sentiment. A significant equity-market deleveraging event could affect liquidity and investor positioning across multiple asset classes.

The key test for markets will be whether September produces the type of sustained equity decline capable of activating the systematic selling thresholds identified by Bank of America. How quickly buyback demand returns after earnings season, and whether the weekly outflows from equity funds persist, will shape how much support equities have on the other side of any drawdown.

Written by Victoria Hale, Technology & Blockchain Writer.