$7.5 trillion is now parked in U.S. money market funds. This vast amount of capital marks a new all-time high that risk asset traders are closely watching. Why? Because as yields trend lower and the Fed prepares to cut rates, this colossal dry powder could be primed to flood into risk assets, including tech stocks and Bitcoin.
Money market funds have soared by almost $100 billion in just days. Bar Chart posted the figure at $7.4 trillion on September 9, only to be updated on September 13 to $7.5 trillion.
Semantics? Maybe, either way, it’s a huge wave of liquidity that could soon be looking for a new home.
Traditionally, this much cash on the sidelines signals huge pent-up appetite for risk, especially as interest rates fall and safe returns shrink. Every rate cut makes holding cash less attractive. So once the Fed slashes rates, investors will seek out higher-yielding, risk-on opportunities, such as Bitcoin and growth stocks.
It’s not a unanimous party, as CryptoSlate reported yesterday. Vocal critics, such as economist and goldbug Peter Schiff, call the Fed’s rate cut a “huge mistake,” warning it could reignite inflation and put the dollar at risk as a reserve currency.
Keep watching the numbers. Every move in rates, every inflation print, and every fiscal headline is rewriting the risk landscape. For Bitcoin and risk assets, opportunity and volatility have never looked bigger.
