What you are describing I would say is a pre-burst situation. I have literally zero economic education, tho, but as it seems:

The government tries to reduce inflation by increasing the interest rates, adding pressure to the banks in the way. However, it tries to save the banks. Every bailout worsens the government problems and inflation, approaching to a scenario where it is no longer able to save every bank that implodes and you get a domino effect.

Just to emphasize, I know that I know nothing, but in this process, businesses or funds that require capital or go through a bad financial moment fail without options or bailouts, as they cannot ask for cheap money anymore.

From that you can guess, if a fund becomes bankrupt and it holds a vast percentage of a company, its shares are going to fall with the fund proportionally, to its share of the company and the final prize after somebody buys the fund. Now the question is, who is going to fall? and what businesses are most likely to be affected?

Personally, seems hard that SP500 falls deeper than a 10%, as its shares are spreaded around the world. Other companies, strongly supported by a single fund or bank, can have heavy falls even if the company is still profitable. what do you think?