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 period, 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.

MeNews

2026-05-25 20:21:22

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ME News Report, May 16 (UTC+8), Grayscale Research Director Zach Pandl stated that against the backdrop of rising inflation in the United States, the Federal Reserve may maintain high interest rate policies for the long term, which will have three core impacts on the crypto market. He believes that as the US CPI approaches 4%, the new Federal Reserve Chair Kevin Warsh has almost no room to cut interest rates, and the market's current expectation for the first rate cut has been pushed back to 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 an interest-free asset, higher real interest rates will increase the opportunity cost of holding dollar assets. However, it remains optimistic about Bitcoin's long-term prospects and believes that regulatory benefits such as the CLARITY Act can partially offset this pressure. Additionally, it believes that a high interest rate environment will accelerate the tokenization of fixed income assets. Currently, yields on US dollar fixed income products are higher than most DeFi yields, for example, the lending rate for USDC on Aave is about 3.6%, and short-term corporate bond yields are around 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. They estimate that for every 25 basis point increase in short-term interest rates, Circle's revenue will increase by approximately $190 million. (Source: BlockBeats)

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MountainShadowsBeforeTheStorm

· 2h ago

If the GENIUS Act actually passes, it will be much more effective than interest rate cut expectations.

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BluePeonyDarkroom

· 7h ago

Will interest rates only be cut in September 2027? Then I'll go short on U.S. Treasuries first.

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NarrativeCartographer

· 9h ago

Zach is repeating the same old tune; every time inflation data is released, he says the same thing.

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MoonlightReef

· 13h ago

High interest rates do suppress BTC, but delaying the rate cut expectation until 2027 is too harsh—are institutions just hyping it up?

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Grayscale: The Federal Reserve may maintain high interest rates for the long term, which is bearish for Bitcoin but bullish for Circle and RWA.

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