Liquidity Alert Before FOMC Meeting: Private Credit Funds Restrict Redemptions, Bitcoin and Ethereum May Face Selling Pressure

March 13 News: As the Federal Reserve’s March FOMC interest rate meeting approaches, signs of liquidity tightening have emerged in the U.S. private credit market, with several large fund management firms beginning to restrict investor redemptions. Some analysts view this change as a potential risk signal, as locked-in funds may lead investors to sell more liquid assets to raise cash, including Bitcoin and Ethereum.

Since late February, Blue Owl Capital, BlackRock, HPS, Cliffwater, and Morgan Stanley’s related private credit funds have each implemented redemption restrictions. When some funds limit outflows, investors often withdraw early from other funds to avoid being locked in, creating a chain reaction.

For example, Cliffwater’s flagship fund, managing about $33 billion, limited quarterly redemption to 7% after investors attempted to redeem a record 14%, only fulfilling half of the redemption requests. Meanwhile, Morgan Stanley’s North Haven Private Income Fund also capped redemptions at 5%, paying out approximately $169 million, about 45.8% of investor requests.

Market analyst Justin Bechler pointed out that within just three weeks, five private credit institutions have taken measures to restrict or delay redemptions. Since these investors cannot quickly withdraw their funds, they may sell other assets to obtain cash, with Bitcoin and Ethereum often being among the most liquid risk assets in their portfolios.

The macro environment has also heightened market tension. The Fed will hold its FOMC meeting on March 17-18. The CME FedWatch tool shows over a 99% probability that the Fed will keep rates in the 3.50% to 3.75% range. However, market focus remains on Fed Chair Powell’s policy signals, as any hawkish tone could accelerate de-risking in the credit markets.

Historical data indicates that Bitcoin has declined after seven of the eight FOMC meetings held in 2025. Meanwhile, crypto market sentiment indicators have fallen into extreme panic territory not seen since 2022. If macro liquidity tightens further, Bitcoin’s key support levels could come under pressure.

Additionally, risk hedging activities in the credit market have increased significantly. Data shows that the open interest in put options on major U.S. credit ETFs has risen to about 11.5 million contracts, doubling from last year and surpassing 2022 levels. At the same time, spreads on high-yield corporate bonds have widened to 556 basis points, indicating active hedging of potential credit risks by institutional investors.

Against this backdrop, the crypto market faces dual pressures: on one side, liquidity tightening in the private credit market may trigger capital outflows; on the other, macro volatility driven by FOMC policy signals. Market participants will closely watch the Fed’s meeting outcomes and shifts in institutional fund flows.