The Fed made a more aggressive start than expected last week, cutting interest rates by 50 basis points.
This interest rate cut mobilized risk assets such as Bitcoin (BTC) and prices increased.
However, while the FED’s rate cut positively impacts BTC and altcoins, it also impacts the revenue of stablecoin issuers Tether and Circle.
Bluechip, an independent stablecoin rating agency, reported in a post on its X account that for every 50 basis point interest rate cut by the FED, USDT issuer Tether lost $488 million and USDC issuer Circle lost $144 million in annual revenue.
This is because as interest rates fall, stablecoin issuers are earning lower yields than U.S. Treasury bonds, Bluechip said, “which pushes them to seek higher returns through riskier investments to offset the decline in income.”
*This is not investment advice.