Bluechip says the Fed’s rate cut had a negative impact on the earnings of stablecoin issuers
Last week, the US Federal Reserve cut rates for the first time in 4,5 years
25.09.2024 - 14:53
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What’s new? Bluechip analysts have said the negative impact of the US Federal Reserve’s monetary policy easing on the earnings of stablecoin issuers. Issuers — including major companies, Tether with its USDT coin and Circle with its USDC coin — use US Treasury bills as reserves, earning yields from them.
What else is known? The Fed last week cut the rate for the first time in 4,5 years after a round of hikes that left it at a 20-year high of 5,25-5,5% since July 2023.
On September 18, the rate was cut by 50 basis points. Bluechip calculates that each 50 bps rate cut causes Tether and Circle to post annualized losses of $488 million and $144 million, respectively. This is because Treasury bill yields are falling.
“This may push them towards riskier investments to make up for the loss of revenue,” analysts believe.
Earlier this month, Tether released its Q2 audit. The company has $118,4 billion in reserves, of which $97,6 billion is represented by US Treasury bonds. The company is the 18th largest investor in US government debt, ahead of Germany, the UAE, and Australia. In addition, its reserves are $5,3 billion more than its liabilities.
By the time of writing, the capitalization of USDT has grown and reached $119,4 billion. According to this indicator, the asset is in third place in the overall ranking of cryptocurrencies, behind only bitcoin and Ethereum. USDC is in sixth place with an indicator of $36 billion.
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