Fed Rate Cuts Could Trigger $7.4T Liquidity Surge into Bitcoin, Stocks

Money market funds (MMFs) hold $7.39 trillion in assets as of October 8, ￰0￱ marks a record high, up from $3.8 trillion in ￰1￱ shifted cash here amid high yields above 5% and market ￰2￱ and pensions treat these funds as safe havens for short-term securities like Treasury ￰3￱ Signals Further Rate Reductions The Federal Reserve cut its benchmark rate by 25 basis points in September 2025, to 4-4.25%. Officials project two more cuts by year-end if labor data weakens ￰4￱ price in 150-200 basis points of easing through ￰5￱ could drop T-bill yields below 4%, reducing MMF income by $100-140 billion ￰6￱ Shift Targets Risk Assets Lower yields may drive 10% of MMF assets—$739 billion—into equities and ￰7￱ shifts, like 2009's $500 billion move, fueled broad ￰8￱ channels, including ETFs, will amplify flows.

High-yield spreads could tighten, boosting credit ￰9￱ marks larger rotations as potential market drivers, based on past ￰10￱ ETFs Attract Institutional Flows Bitcoin spot ETFs saw $3.5 billion in weekly inflows in early October 2025. BlackRock's IBIT alone drew $3.5 billion that week, nearing $100 billion in ￰11￱ 2025 inflows hit $26 billion. Bitcoin's fixed supply draws capital as a scarcity ￰12￱ speculate 5% MMF shifts could lift prices to $280,000-$350,000, though flows often favor bonds first.