American market funds currently have more than $ 7 trillion, which some analysts believe to be rotated soon to different chapters of assets, including cryptocurrencies, and may feed the next leg higher in Bitcoin And alternative cryptocurrencies (altcoins).
The money market fund is a type of investment box in high -quality short -term debt tools, such as Treasury bills, deposit certificates and commercial paper.
The total assets of the Money Market Fund increased by $ 52.37 billion to 7.26 trillion dollars for the week ending September 3, According to the Investment Institute Institute (ICI). The assets of the retail market rose by $ 18.90 billion to $ 2.96 trillion, and institutional funds rose by $ 33.47 billion to $ 4.29 trillion. ICI reports of the Federal Finance Fund assets to the Federal Reserve every week.
The money market funds have been inflated in recent years, as the money was initially drawn due to the appeal of the haven during the crisis caused by the Coronavos virus in early 2020, and later during the interest rates course, which prompted revenue and attracting investors.
The flows remained strong in late last year, even with the reduction of federal reserve rates from 5.25 % to 4.25 %. However, the additional discounts of investors can lead to the transformation of a large part of the money pile into other assets, including encrypted currencies, according to David Dong, the institutional head of research at Coinbase.
“There is more than 7 trillion dollars inside the money market boxes, all of which is retail money. With the start of price cuts, all this retail cash flow will really enter other asset categories such as stocks, krofa and others.” Duung Keidisk said In an interview.
The US Central Bank is expected to reduce its target price At least 25 basis points When it meets next week, according to the Fedwatch tool for CME. Some market participants expect 50 basis points.
Traditional market monitors are equally clear about the pile of money in the money market. In an interview with the Boutique Family Office and Special Resources Management, the large investment strategies in Cresset, Jacques Applein, stated that the price cuts can redirect the money market flows to the stocks and encrypted currencies.
“There is slightly more than 7 trillion dollars in the money market funds that produce about 4.5 %. If this return decreases to 4.25 % or 4 %, this may push more investors to republish money to stocks,” Applein explained.
The rotation depends on the broader economic environment
While the money market pile is expected to flow soon to more dangerous assets, this rotation is not guaranteed.
The extent to which investors rely on money on the broader economic environment. Therefore, in the event of price cuts against the background of economic slowdown or increased economic uncertainty, many investors may prefer to continue to keep the money market funds.
These funds provide relatively stable returns and immediate cash access, making it an attractive choice when confidence in growth and financial markets fade. Therefore, although revenue from price cuts, investors may remain cautious, and maintain great balances in the money market boxes.
According to PseudNetho Observer Endgame Macro, investing in the Standard Money Market is actually a sign of imminent economic pain.
“We only see a accumulation of such when the investors want the return but they do not want to face the risks of the duration or stocks. This happened after the Dot Com? Macro said the end of the game on X.
The observer added that with the low prices, the money is allocated for the first time for the treasury notes and then at the risk of assets.
Duration risks indicate the sensitivity of fixed income investment (Bond) The price of changes in interest rates. In the context of the money market funds, which invest in short -term debt tools that are usually less than one year, the risk of the duration is relatively low compared to long -term bonds.
For each game the end of the game, the rotation depends on the size of the imminent rate.
“The biggest question now is not only if the FBI’s discounts are, this is what provides a warning of 25 basis points for funds to gradually bleed, while cutting 50 points per second can accelerate the transformation, and pushes the money to the treasury first, then the risk assets disappear with the disappearance of the return feature.
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