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Fed rate hikes can boost stablecoin reserve income, squeeze Bitcoin borrowers

CryptoSlate notes Circle said reserve income drove most of its revenue in the three months ended June 30, 2026, tying stablecoin earnings to backing yields.

Reported · Written up by our desk · Market Structure

CryptoSlate argues that changes in Fed policy can affect stablecoins and Bitcoin borrowing in opposite ways, because higher rates may increase returns on assets backing dollar stablecoins while raising the cost of financing strategies that borrow to buy Bitcoin.

The outlet says a bond-market move does not hit all crypto businesses the same, since different contracts transmit rates differently across participants and products.

CryptoSlate points to Circle's second-quarter filing to illustrate the link between reserve earnings and rate levels, saying reserve income supplied 95.2% of revenue in the three months ended June 30, 2026.

It adds that reserve returns track close to the secured overnight financing rate, meaning stablecoin-linked revenue can depend on how many stablecoins are outstanding and what their backing earns, while overnight returns and the 10-year Treasury yield can move differently.

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