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- Investors are holding $7.4 trillion in MMFs, parked safely in short-term instruments like Treasury bills while they await moves from the Federal Reserve.
- Analysts estimate that a move of just 1% of this liquidity into crypto could trigger gains, publishing forecasts for Bitcoin reaching $150,000.
On September 17, the U.S. Federal Reserve will hold its next Federal Open Market Committee (FOMC) meeting, a key gathering where policymakers decide on interest rates and monetary policy direction. This meeting is especially important because many expect the Fed to begin cutting its benchmark rate, which currently ranges from 4.25% to 4.50%.
At the same time, investors are sitting on $7.4 trillion in money market funds, the largest pile of cash on the sidelines in history.
Market analyst EndGame Macro explains why that matters:
We only see buildups like this when investors want yield but don’t want to take on duration or equity risk. It happened after the dot-com bust, again after the GFC, and in 2020–21 when rates were floored and money waited on the sidelines. Right now, elevated yields north of 5% have made cash unusually attractive, but that dynamic won’t last if the Fed starts cutting.
Should the Fed cut rates by 25 or 50 basis points, cash will start losing its shine, with yields on money market funds, savings accounts, and short-term Treasuries edging lower. History shows how this usually plays out.
Once the yield advantage erodes, money tends to rotate, first into Treasuries for safety and liquidity, and then, as confidence in the easing cycle grows, into risk assets like equities, credit, and even crypto. We saw this same sequence unfold after the 2001 dot-com bust, the 2008 financial crisis, and again in 2019 when the Fed pivoted to rate cuts.
Crypto’s Place in the Rotation
In July, market commentator Cas Abbe shared his perspective on the macro outlook, noting that when interest rates eventually decline, yields on T-bills will fall, making them a far less attractive option for investors to park their cash.
He also argued that historically, this shift first flows into Treasuries, then gradually rotates into equities and higher-risk assets. This time, crypto is firmly on the radar.
Backing that view, Alex from Bitlaze laid out a much broader picture in a detailed thread, pointing out that this cycle has something we haven’t seen before: direct institutional access to the crypto market.
“This cycle has something new: institutional access. Spot Bitcoin and Ethereum ETFs have created a direct pipeline for pension funds and asset managers, while Altcoin ETF approval is likely on the horizon,” he explained.
For years, big funds and asset managers had limited ways to get exposure to digital assets. Now, with spot Exchange Traded Funds (ETFs) already live and altcoin ETFs like Ripple (XRP), Cardano (ADA), and Solana (SOL) potentially around the corner, even a small allocation could have outsized effects.
Crypto Raven earlier questioned,
Imagine if just $1 trillion or less flows into crypto. I wouldn’t be surprised if $BTC surges to $150,000–$160,000.
For now, our market data shows that BTC has posted modest gains of 0.56% in the past 24 hours and 2.28% on the weekly chart.
At the same time, trading volume spiked by 38% to $41 billion, driving the asset’s market capitalization to $2.24 trillion.
