The Liquidity Wave That Could Push Bitcoin and Risk Assets Much Higher｜Matrixport Research

U.S. markets are entering a liquidity-rich phase that could extend the bull run in Bitcoin and risk assets well into 2026. The current setup echoes past episodes where abundant cash, supportive credit conditions, and a dovish shift in monetary policy created powerful tailwinds for asset prices.

Since Q4 2018, U.S. money market fund assets have surged from $3 trillion to a record $7.4 trillion, now generating roughly $320 billion annually in interest income — capital that could rotate into higher-return assets without touching principal. Corporate buybacks are also at unprecedented levels, with $984 billion announced so far in 2025, on pace to exceed $1.1 trillion by year-end. These flows are being deployed into an equity market where volatility is at multi-year lows, creating steady upward pressure on valuations.

The structure of the financial system is magnifying these effects. The Fed’s post-2008 authority to pay interest on reserves has led to $3.4 trillion in bank reserves and $176 billion in annual interest payments to banks. This, alongside elevated policy rates, has disproportionately benefited money market fund holders and commercial banks, but our rate-cut model signals the Fed is behind the curve — lagging market expectations for 32 consecutive months — and…