As a seasoned crypto investor with a decade-long journey under my belt, I find myself both intrigued and concerned by the recent move by the Federal Reserve to slash interest rates. The $625 million in lost annual interest income for each 50bps cut, as highlighted by CCData, is a stark reminder of the intertwined nature of traditional finance and decentralized assets.
The Federal Reserve’s 50 basis points rate cut earlier this month is set to cost lading stablecoin issuers around $625 million per month, as the interest earned on the reserves backing these stablecoins dropped as a result.
According to CCData’s recent report on Stablecoins & CBDCs, the five most significant centralized stablecoins – USDT, USDC, FDUSD, PYUSD, and TUSD – collectively possess around $125 billion in U.S. Treasury bills. A decrease of 0.5% (or 50 basis points) in interest rates could potentially lower their annual interest income by approximately $625 million.
Approximately $125 billion worth of U.S. Treasury Bills are held by the leading five centralized stablecoins, representing about 80% of their total reserves. This means that a reduction in interest rates, such as the first one since March 2020, could result in an annual loss of $625 million for each half-percentage point (50bps) cut in interest income.
— CCData (@CCData_io) September 27, 2024
The Federal Reserve reduced its interest rate for the first time in over four years, and this reduction was notably significant. This move suggests that the central bank feels it is successfully combating inflation, as indicated by data from TradingEconomics showing a decrease in inflation rates from 9.1% in June 2022 to 2.5% in August of this year.
In their recent financial statements, it’s clear that Tether is holding close to $93.2 billion in U.S. Treasury bills and repurchase agreements. This significant amount played a crucial role in generating a net income of approximately $5.2 billion during the first six months of the year. Meanwhile, USDC, one of the largest stablecoins, holds around $28.7 billion in U.S. Treasury bills through the Circle Reserve Fund. Additionally, FDUSD, PYUSD, and TUSD collectively hold approximately $1.83 billion, $634 million, and $502 million in U.S. Treasury assets, respectively.
According to CCData’s findings, the stablecoin market maintained an uptrend for the twelfth straight month, with September marking a rise in its overall market capitalization. This growth amounted to approximately 1.50%, pushing the total market value of stablecoins up to roughly $172 billion.
Even though the market has been gradually rising, it’s yet to surpass its condition prior to May 2022, when the Terra Luna de-peg led to major disturbances. Although the total market capitalization grew, the trading volume for stablecoins saw a decline – with $683 billion in transactions recorded on the 23rd of September.
Read More
- DOT PREDICTION. DOT cryptocurrency
- BTC PREDICTION. BTC cryptocurrency
- EUR USD PREDICTION
- GBP EUR PREDICTION
- ETH PREDICTION. ETH cryptocurrency
- SKL PREDICTION. SKL cryptocurrency
- LTO PREDICTION. LTO cryptocurrency
- Demi Lovato Shares Forever Dreams And Parenting Aspirations With Fiancé Jordan Lutes: ‘I See Growing Old With Him’
- Dragon Ball Daima Episode 1: Release Date, Expected Plot, Cast Details & More
- Who Is THE PENGUIN’S Sofia Falcone? Her DC Comics History, Explained
2024-10-01 10:24