Fed Rate Cuts Could Trigger a $7.5 Trillion Shift Toward Bitcoin
Money market funds (MMFs) have reached a record value of $7.39 trillion as of October 8, 2025, nearly doubling from $3.8 trillion in 2009. With market volatility and yields above 5%, many investors—especially corporations and pension funds—have been parking cash in these short-term, low-risk assets like Treasury notes.
Fed Signals Further Rate Cuts
In September 2025, the Federal Reserve cut its benchmark rate by 25 basis points to a range of 4–4.25%. Policymakers anticipate two more cuts by year-end if labor data continues to weaken. Markets are pricing in an overall easing of 150–200 basis points through 2026. If T-bill rates drop below 4%, MMF income could decline by $100–140 billion annually.
Shifting Liquidity Toward Riskier Assets
Lower yields could push investors to look elsewhere for returns. Roughly $739 billion—about 10% of MMF assets—could move into equities and bonds. Historical trends show similar rotations, such as the $500 billion reallocation in 2009, which helped spark major market rallies. A renewed focus on risk assets could tighten credit spreads and support broader market gains.
Institutional Interest in Bitcoin ETFs
Institutional inflows into Bitcoin spot ETFs have been accelerating. In early October 2025 alone, $3.5 billion entered Bitcoin ETFs, led by BlackRock’s IBIT, which now holds around $100 billion in total assets. For 2025, cumulative inflows have reached $26 billion.
As investors seek alternatives to low-yield assets, Bitcoin’s fixed supply and scarcity appeal make it a strong hedge. Analysts estimate that if just 5% of MMF assets moved into Bitcoin, the price could climb to $280,000–$350,000. Still, traditional markets like bonds are expected to see inflows first.
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