Grayscale Research Director Zach Pandl States US CPI Near 4%, New Fed Chair Kevin Warsh Has Little Room for Rate Cuts
Grayscale Research Director Zach Pandl stated that the US CPI is close to 4%, and new Federal Reserve Chair Kevin Warsh has little room for rate cuts, with the market pushing the first rate cut expectation to September 2027.
Long-term high interest rates will increase the opportunity cost of holding non-yielding assets like Bitcoin, putting pressure on "currency devaluation trades"; at the same time, it will accelerate the tokenization of fixed-income assets; stablecoin issuers will benefit significantly.
In terms of market mechanisms, institutional funds are accelerating the flow from non-yielding assets like Bitcoin to high-yield RWA and stablecoin reserves, driving capital towards stablecoin issuers like Circle and fixed-income tokenization protocols, putting short-term pressure on Bitcoin and high Beta DeFi protocols.
Source: Public Information
ABAB AI Insight
Zach Pandl has previously published macro-crypto cross reports at Grayscale, and this analysis of the impact of high interest rates continues the framework of "real interest rates suppressing non-yielding assets" during the 2022-2023 bear market, emphasizing changes in opportunity costs at Fed policy turning points.
In terms of capital pathways, Grayscale is shifting institutional allocations from pure Bitcoin trusts to RWA fixed-income products and stablecoin reserve management, motivated by capturing the yield spread where short-term treasury/corporate bond yields (around 4.5%) exceed DeFi lending rates (Aave USDC around 3.6%), while leveraging the institutional dividend from the GENIUS Act that allows issuers to retain reserve income.
Similar cases include the significant correction of Bitcoin during the 2022 high interest rate cycle and the institutionalization of stablecoin reserve income after the passage of the GENIUS Act. The current crypto market is transitioning from low-interest speculative driving to high-interest yield-based infrastructure control.
Essentially, this represents a transfer of pricing power: the narrative of currency devaluation in a low-interest environment is replaced by fixed-income tokenization under high interest rates, with the mechanism rooted in stablecoin issuers being able to exclusively enjoy interest on reserve assets while the opportunity cost of non-yielding assets like Bitcoin rises. Only by bringing real-world yield rates on-chain can institutional capital attractiveness be maintained in a high-interest cycle, achieving a structural shift from speculative assets to compliant yield infrastructure.
ABAB News · Law of Cognition
High interest rates always completely stratify non-yielding and yielding assets.
Stablecoin issuers print money in high interest, while Bitcoin incurs opportunity costs in high interest.
When real interest rates rise, pricing power shifts from storytelling to those that can generate real yield.