Bitcoin can rebound fast and hard as $7.7T in “sidelined funds” enter new opportunity window

A significant pool of $7.791 trillion sits in US money market funds, representing "cash on the sidelines" that could flow into riskier assets like Bitcoin. Historically, about 500 to 1000 days after the Federal Reserve begins cutting rates, this liquidity starts rotating out of safe havens. Since the Fed started easing on September 18, 2024, this window is now opening, although the outcome depends on investor incentives as yields on cash decline (e.g., money fund yields dropping to around 3.58%). The composition of this cash—largely institutional—and the path of rotation (duration first, then credit, then risk assets) are key variables. Analysts outline three scenarios: a slow drift with minimal outflows, a soft landing with faster cuts leading to moderate outflows ($390B to $779B), or a recession leading to increased hoarding. Bitcoin's potential rebound hinges on marginal flow, especially if cash skips bonds and moves directly into risk assets, with ETF inflows serving as a key gauge for this rotation.

(Source：CryptoSlate)