"The odds of this are increasingly likely as Fed Chair Powell cut rates by 25 bps today, giving the approximately $7.4 trillion sitting in money market funds a reason to come off the sidelines and move into a hard asset like bitcoin, especially now that it's easier to obtain exposure to bitcoin via spot bitcoin ETFs and proxies like bitcoin treasury companies."
"Powell also signaled today that two more rate cuts could be on the way before the year is out, which would only further reduce returns in money market funds, potentially pushing investors into hard assets like bitcoin and gold as well as riskier assets like tech and AI-related stocks. This could catalyze the final leg of a "melt-up" comparable to what we saw with tech stocks at the end of 1999 before the dot com bubble burst."
Bitcoin historically peaks about 20 months after a halving; the April 2024 halving implies a potential cycle top by December. A 25 bps Fed rate cut increases incentives for roughly $7.4 trillion in money market funds to seek higher returns in hard assets like bitcoin, aided by easier access through spot bitcoin ETFs and bitcoin treasury proxies. Additional Fed rate cuts could further depress money market yields, pushing investors into bitcoin, gold, and risk assets such as tech and AI stocks and potentially catalyzing a late-cycle melt-up. A weakening U.S. dollar would further support hard and risk assets.
Read at Bitcoin Magazine
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