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BTC $79,080.98 -2.71%
ETH $2,220.56 -3.14%
BNB $673.13 -0.86%
XRP $1.43 -4.67%
SOL $89.21 -3.66%
TRX $0.3515 -0.94%
DOGE $0.1129 -2.24%
ADA $0.2606 -4.24%
BCH $424.51 -2.96%
LINK $10.02 -5.27%
HYPE $44.52 +1.60%
AAVE $92.66 -6.79%
SUI $1.09 -8.39%
XLM $0.1543 -6.17%
ZEC $515.95 -3.88%

long

The Federal Reserve may maintain high interest rates for a long time, which is bearish for Bitcoin but bullish for Circle and RWA

Grayscale's research director Zach Pandl stated that in the context of rising inflation in the United States, the Federal Reserve may maintain a high interest rate policy for a long time, which will have three core impacts on the cryptocurrency market. He believes that as the U.S. CPI approaches 4%, the new Federal Reserve Chairman Kevin Warsh has almost no room for interest rate cuts, and the market currently expects the first rate cut to be delayed until September 2027. Grayscale pointed out that long-term high interest rates will put pressure on "currency devaluation trades" such as Bitcoin. Since Bitcoin, like gold, is a non-yielding asset, higher real interest rates will increase the opportunity cost of holding dollar-denominated assets. However, it remains optimistic about Bitcoin's long-term prospects and believes that regulatory benefits such as the CLARITY Act can partially offset the related pressures. In addition, it believes that a high interest rate environment will accelerate the tokenization of fixed income assets. Currently, the yields on dollar-denominated fixed income products are higher than those of most DeFi yields; for example, the USDC lending rate on Aave is about 3.6%, while the yield on short-term corporate bonds is about 4.5%. Grayscale also stated that stablecoin issuers will benefit from high interest rates. Since the GENIUS Act prohibits stablecoins from paying interest to users, issuers can retain the income from reserve assets. It estimates that for every 25 basis point increase in short-term rates, Circle's revenue will increase by approximately $190 million.
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