The Fed may maintain high rates, hurting Bitcoin but benefiting Circle and RWA

ChainCatcher report: Zach Pandl, Head of Research at Grayscale, stated that amid the resurgence of U.S. inflation, the Federal Reserve may maintain high interest rates over the long term, significantly impacting the crypto market in three key ways. He noted that with U.S. CPI approaching 4%, new Fed Chair Kevin Warsh has virtually no room to cut rates, and market expectations for the first rate cut have now been pushed back to September 2027. Grayscale highlighted that prolonged high interest rates will put pressure on “currency depreciation trades” such as Bitcoin. Since Bitcoin, like gold, is a non-yielding asset, higher real interest rates increase the opportunity cost of holding dollar-denominated assets. Nevertheless, Grayscale remains bullish on Bitcoin’s long-term prospects, believing that regulatory tailwinds such as the CLARITY Act could partially offset these pressures. Additionally, Grayscale believes the high-rate environment will accelerate the tokenization of fixed-income assets. Current yields on dollar-denominated fixed-income products already exceed those of most DeFi yields—for example, the USDC lending rate on Aave is approximately 3.6%, while short-term corporate bond yields are around 4.5%. Grayscale also noted that stablecoin issuers will benefit from higher interest rates. Since the GENIUS Act prohibits stablecoin issuers from paying interest to users, issuers can retain the income generated by their reserve assets. Grayscale estimates that for every 25-basis-point increase in short-term rates, Circle’s revenue would rise by approximately $190 million.