Phyrex says rising leverage in U.S. stocks could amplify market swings

Crypto KOL Phyrex said on X that U.S. investors are chasing equity market highs with increasing leverage, pointing to fresh data from June that show deeper reliance on borrowed money inside brokerage accounts. According to his post, net credit balances in U.S. brokerage accounts fell by about $70 billion in a single month to negative $1.061 trillion, the lowest level on record. Over the same period, margin debt rose by about $86 billion to $1.53 trillion, marking a third straight monthly increase and a new record high. Phyrex argued that the continued deterioration in net credit balances signals shrinking cash buffers among investors and a growing dependence on borrowing to maintain stock exposure. He said leverage is now spread broadly across the U.S. brokerage system rather than concentrated in isolated pockets. In rising markets, higher stock prices lift account equity and can unlock additional borrowing capacity, creating mechanical buying. If the market weakens, however, margin pressure may force investors to add cash or sell shares, turning the same leverage that supported the rally into mechanical selling pressure. In his view, the combination of high valuations and elevated margin usage leaves U.S. equities more vulnerable if fresh inflows slow.