High interest rate environments are indeed unfriendly to Bitcoin, but when it comes to stablecoin yields, DeFi is about to get lively again.

Gray Research Director Zach Pandl states that the resurgence of inflation in the United States could lead the Federal Reserve to maintain high interest rates for a long time, with three major impacts on the crypto market: first, high interest rates suppress the attractiveness of interest-free assets like Bitcoin; second, rising real interest rates increase the opportunity cost of dollar assets; third, tokenization of fixed-income assets accelerates, and stablecoin yields rise. Regulatory benefits such as the CLARITY and GENIUS acts may provide some buffer. Market expectations for the first rate cut have been pushed back to September 2027.