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Investors are parking cash at a pace that would make a valet jealous. US money market fund assets hit $8.281 trillion as of May 28, a $66 billion jump in a single week, according to Crane Data LLC.
The numbers behind the rush
Of the $66 billion weekly inflow, roughly $41 billion landed on a single Thursday during month-end portfolio rebalancing. Year-to-date inflows now total $172 billion through the end of May. Money market fund assets have grown by 112%, or $4.4 trillion, since pandemic-era lows in 2020.
The seven-day average yield on money market funds stood at 3.34% by late May. That number matters because it represents a virtually risk-free return that competes directly with longer-duration bonds, equities, and crypto yield products. When you can earn 3.34% doing essentially nothing, the bar for riskier investments gets a lot higher.
The Fed factor and inflation anxiety
The market is currently pricing in a roughly 60% probability of a 25-basis-point rate hike this year. That’s a remarkable reversal from the consensus earlier in the year, when multiple cuts were still baked into forward curves. Heightened inflation concerns tied to geopolitical tensions have forced traders to recalibrate, and money market funds are the direct beneficiary of that recalibration.
What this means for crypto investors
DeFi protocols offering 2-4% on stablecoin deposits suddenly look less appealing when a government-backed money market fund pays the same without smart contract risk, impermanent loss, or regulatory ambiguity.
Tokenized money market funds and Treasuries recently reached a record $15.35 billion in total value locked in May. That’s a rounding error compared to $8.28 trillion, but as traditional finance increasingly explores on-chain versions of these instruments, the infrastructure connecting TradFi capital to crypto rails gets stronger.
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