**Crypto News: Impact of FED’s Interest Rate Cuts on Bitcoin and Stablecoins**
Recent interest rate cuts by the Federal Reserve have sparked a surge in Bitcoin’s (BTC) value, but the effects on certain altcoins, particularly stablecoins, are less favorable. According to a report from Bluechip, an independent agency that assesses stablecoins, the consequences of each 50 basis point cut in interest rates are significant for major stablecoin issuers.
In a recent post on its X account, Bluechip highlighted that Tether, the issuer of USDT, experiences a loss of approximately $488 million in annual revenue for every rate cut, while Circle, the issuer of USDC, sees a decline of about $144 million. This situation arises because lower interest rates diminish the yields that stablecoin issuers can earn from U.S. Treasury bonds. Consequently, these issuers may be compelled to pursue riskier investment opportunities to compensate for their reduced income.
As the Federal Reserve implements these cuts, the implications for stablecoin issuers become more pronounced. Bluechip explained that the shift towards riskier investments is a strategy to counterbalance the income decline resulting from lower yields on treasury bills.
The data provided by Bluechip underscores the delicate balance between enhancing Bitcoin’s market appeal and the financial strain it places on stablecoin providers.
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