The Fed's rate cut won't come until 2027! Grayscale analyzes the three major impacts of high interest rates: Bitcoin under pressure, while RWA and stablecoin issuers emerge as the biggest winners

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Rate cut expectations have been pushed back significantly to 2027 — what major shifts await the crypto market? The head of research at asset management giant Grayscale recently wrote that under the Fed's "higher-for-longer" stance, the market will face three core impacts: anti-inflation assets like Bitcoin will face short-term pressure, RWA (fixed-income tokenization) will see explosive growth; and the biggest winner will be stablecoin issuers — for every 1 basis point rate hike (0.25%), Circle's annual revenue could surge by $190 million. (Background: Grayscale: Bitcoin has established a "solid bottom"! Short-term buyers breaking even signals first phase of bull market) (Context: Grayscale report: Zcash is "severely undervalued" by the market! AI surveillance pushes privacy demand, ZEC poised to become top digital cash choice) As US headline inflation again approaches the 4% mark driven by energy costs (core PCE estimated at 3.3%), market optimism about Fed rate cuts has been thoroughly extinguished. On the 14th, Zach Pandl, head of research at asset management giant Grayscale, published his latest column titled "Higher-for-Longer Rates: Three Key Implications for Crypto." He pointed out that new Fed Chair Kevin Warsh is highly likely to continue tightening policies, and the market has now significantly pushed back the timing of the first rate cut to September 2027. Under this "higher-for-longer" macro scenario, Pandl believes the crypto asset sector will see three of the most notable trend shifts: Bitcoin's (BTC) store-of-value properties are often compared to gold, as both are "non-yielding" assets that primarily compete with fiat currencies like the USD. Pandl analyzes that when the "real interest rate" (nominal rate minus inflation) climbs, the "opportunity cost" for investors holding zero-yield assets significantly increases, which will exert substantial pressure on Bitcoin's price. However, Pandl also offered reassurance, emphasizing that despite macroeconomic headwinds, he remains optimistic about Bitcoin's long-term outlook. He expects recent major regulatory progress in the US (such as the advancing CLARITY Act) to effectively offset the negative impact of high interest rates. The high-rate environment is creating significant arbitrage opportunities between traditional finance (TradFi) and decentralized finance (DeFi). Currently, USD-denominated fixed-income securities yields are generally higher than risk-free yields in DeFi protocols. Pandl gives an example: the current USDC lending rate on Aave is about 3.6%, while traditional short-term corporate bond yields are around 4.5%. This yield spread provides powerful momentum for real-world asset tokenization (RWA). When crypto-native investors crave higher yields through tokenized bonds, traditional issuers will have strong incentives to bring more quality fixed-income assets onto the blockchain, which will further accelerate the maturation and expansion of the RWA sector. In this high-interest-rate party, the most direct and biggest beneficiaries are undoubtedly USD stablecoin issuers. Take Circle (the USDC issuer) for example — they hold large amounts of yield-bearing assets in their reserves (such as short-term US Treasuries), but under strict current legal frameworks (such as the GENIUS Act), issuers are prohibited from paying interest to ordinary stablecoin holders. This means the longer the Fed maintains high interest rates, the more astonishing the "free spread" these issuers earn becomes. Pandl made a striking estimate in the report: for every 25 basis point rise in short-term rates (i.e., 0.25%), Circle's annual revenue would directly increase by approximately $190 million. This explains why major institutions are rushing to grab a slice of the massive stablecoin market dividend.

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