$13.8B Incoming: Are US Pension Funds About to Fuel a Crypto Rally?

A crypto rally at the time of writing is one thing many are very unsure about. The market has been mostly bearish over the last three months.

However, March offered more in terms of stability and price increases. By comparison, the global cryptocurrency market surged by 12% in January, but closed with losses exceeding 10%. Over the last 28 days, it saw a 13% hike, but trades at the opening price at the time of writing.

The latest uptrend was the highest since August. Nonetheless, with the market cap back to its opening price, the conviction of a green close this month is at its lowest.

Away from the global cryptocurrency market cap, the third month of the year improved investors’ sentiment. In February, the fear and greed index dropped to a low of 5. However, it surged to its highest on Mar 17, peaking at 43. Traders remain significantly bullish amid declining prices, evidenced by the index at 25.

Nonetheless, the month was riddled with the war in the Middle East, which has been both a good and bad event for the crypto market. In recent times, investors have switched from investing in some sectors to the crypto market.

The stablecoin exchange reserve surged in response to the new inflow. It is worth noting that it had been on a decline for months before March. It was at $64.8 billion as of Mar 1 and peaked at $68.8 billion a few days later.

However, the fear of further escalation in the Middle East is prompting investors to withdraw liquidity from the market. At the time of writing, exchange reserves are back to where they were at the start of the month.

While this is bad news for the market, another event promises to restore liquidity.

US Pension Funds are Planning Something Big

A recent report from The Kobeissi Letter noted that US pension funds may purchase $13.8 billion of US equities by quarter-end. These institutions will be making a purchase that outweighs 97% of their previous buys in the last three years and 93% of such accumulation since 2000.

The latest announcement is also significant as pension funds have sold an average of $1.8 billion per month since 2000.

Interestingly, the funds may also be preparing for a big world event. Each prior large equity purchase has preceded or coincided with a major event. For example, the largest buying ever recorded was $80.6 billion in 2020 during the pandemic.

Considering this, it makes sense that pension funds are stacking equities amid conflict in the Middle East. Nonetheless, the next question to answer is whether it will affect the crypto market.

Likely. A closer look at the correlation between the S&P 500 and Bitcoin points to a high likelihood that a surge in equity purchases will also affect the crypto market. The chart above perfectly illustrates the trend mentioned earlier.

In most instances, both instruments have moved in high correlation with each other. Paying attention to the events between January and October 2025 depicts almost perfect sync. However, it reduced during the following month. One reason for this near-synchronous movement is that when funds trickle into US equities, the crypto market also experiences liquidity inflows.

When investors go in search of high-risk assets, they think of stocks and cryptos. If the trend holds this time, the market will also see a trickle of inflow.

However, the scale remains to be seen. In either case, the S&P 500 will likely get a large share of the pie, and a couple of companies in this index have crypto exposure.

The Groundwork for a Crypto Rally

Thinking of a more direct impact brings ETF in view. Although there have not been any major announcements from firms buying crypto exchange-traded funds, the figures suggest notable institutional interest.

If companies with crypto exposure see some of the impending liquidity inflow, they may stack up major assets like Bitcoin and Ethereum or their ETFs.  

Aside from this direct impact, several efforts have been made to encourage investment from equities to flow into the crypto market. One such is the collaboration between Kraken and STS. Both firms announced a partnership to launch the first structured products platform for cryptocurrency and provide advanced solutions to institutional clients worldwide.

A few days before they made it public, S&P Dow Jones Indices licensed its flagship benchmark for the first official perpetual futures contract on a decentralized blockchain.

Summing it all up, the various pipelines (Options, ETFs, equities from companies with crypto exposure) will ensure that some of the over $13 billion will find its way into the crypto market.

How Will It Trigger the Crypto Rally?

Data from CryptoQuant shows that the difference between the March opening stablecoin exchange reserve and its peak is $4 billion. The first $1 billion in liquidity inflows triggered further inflows, leading to a surge across the market.

While the exact figure entering the market has yet to be determined, a slight inflow could trigger a more bullish reaction. If this happens, it will be the start of a crypto rally in the coming days.

Since the major purchase will happen by quarter-end (end of March), the capital inflow and subsequent hikes may start in April. This will mean a bullish start to the new month.

Away from the predictions, for the first time in the last four months, Bitcoin spot ETFs may end the month with positive netflow. The largest outflow occurred in November, when they posted a negative netflow of more than $3 billion.

If buying holds steady for the next two days, the investment may end March with a positive netflow of $1.13 billion.

The post $13.8B Incoming: Are US Pension Funds About to Fuel a Crypto Rally? appeared first on CoinTab News.