Gray Research Director Zach Pandl states that the resurgence of inflation in the United States may 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 bills may provide some buffer. Market expectations for the first rate cut have been pushed back to September 2027.

MeNews

2026-05-25 23:38:07

Abstract generation in progress

ME News Report, May 16 (UTC+8), Gray 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. Gray 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-interest-bearing asset, higher real interest rates will increase the opportunity cost of holding dollar assets. However, he remains optimistic about Bitcoin's long-term prospects and believes that regulatory benefits such as the CLARITY Act can partially offset this pressure. Additionally, he 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%. Gray 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. He estimates that for every 25 basis point increase in short-term interest rates, Circle's revenue will increase by approximately $190 million. (Source: BlockBeats)

BTC-0.17%

CRCLX-1.12%

RWA-0.19%

GLDX-0.49%

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

11 Likes

Reward
11
5
3
Share

Comment

Add a comment

WalletHealthInspector

· 9h ago

Interest rate cuts won't happen until September 2027? That means we have to wait over two more years, and the bear market cycle has been forcibly extended.

View OriginalReply0

ReflectionsOnTheStreetAfterThe

· 12h ago

After the real interest rate rises, dollar assets indeed become more attractive, but tokenization allows on-chain participation as well—considered a sneaky way to get ahead?

View OriginalReply0

GateUser-14cb5f72

· 12h ago

The judgment that fixed income tokenization is accelerating is quite ambiguous, after all, they are involved in this themselves, and have a vested interest.

View OriginalReply0

GateUser-8df0eb2b

· 12h ago

What is the progress of the CLARITY Act? It seems that regulatory benefits are always loud thunder and little rain.

View OriginalReply0

FrictionlessFred

· 12h ago

High interest rates suppress BTC's attractiveness is a well-worn topic, but whether the reduced supply after the halving can offset weak demand is worth watching.

View OriginalReply0

Trending Topics
View More
#
StockTradingChallengeUpTo17000U
16.2M Popularity
#
USStrikesIran
9.3M Popularity
#
GatePredictionMarketAddsSmartMoneyTracking
13.79M Popularity
#
InstitutionalCapitalRotatesFromBTCToHYPEAndXRP
14.33M Popularity
#
TradeCFDWinGold
3.07M Popularity

Pinned

Sitemap

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

Trending Topics

StockTradingChallengeUpTo17000U

USStrikesIran

GatePredictionMarketAddsSmartMoneyTracking

InstitutionalCapitalRotatesFromBTCToHYPEAndXRP

TradeCFDWinGold

Pinned