While the entire market is hoping that the Federal Reserve will announce a cut in interest rates, the crypto market is holding its breath as the decision is set to influence the ebbs and flows of cash flow into the industry.

As the Federal Open Market Committee (FOMC) meeting concludes on Sep. 17, there is an expectation of a rate cut of 25 basis points.

Kevin Rusher, founder of real-world asset (RWA) borrowing and lending ecosystem RAAC, says what matters in the long term is not the magnitude of the cut but the trillions of dollars in money market liquidity and mortgages it will unlock.

Around 80% of the U.S. mortgages are currently locked in at interest rates lower than 5%, leaving homeowners with little interest in refinancing, Rusher says. If the Fed slashes rates, it will revive the circulation of credit and liquidity that the market has been missing out on throughout the year. He adds,

\\"Money is like gravity – it is always seeking yield.\\"

Rusher argues that if the Fed restarts its rate-cutting spree tomorrow, we can expect liquidity to flow into alternative yield-generating investments. It means the Fed's dovish outlook could trigger a cash flood into yield-bearing decentralized finance (DeFi) products and RWA tokens, he adds.

Fed's rate cuts might cause a crypto market crash

BlackRock plans to tokenize ETFs following its blockbuster Bitcoin ETF

Crypto traders bet on 80% chance of rate cut in September

Rusher is hopeful of an increased cash flow into stablecoins in case the Fed cuts rates.

\\"Stablecoins are a potential winner here, as they are increasingly being integrated into the global financial system.\\"

Most of you already know what a stablecoin is. In simple words, it is a type of cryptocurrency that maintains a stable value by being pegged to a fiat currency or a commodity.

Now, yield-bearing stablecoins are slightly different from the conventional USD-pegged stablecoins in that the former generate yields through real-world asset backing or protocol lending.

Related: What are yield coins? Yield bearing assets explained

For instance, Ondo Finance's USDY is a stablecoin that is backed by yield-generating U.S. Treasuries. So, anyone who holds USDY earns yields.

As per CoinGecko, the total market cap of yield-bearing stablecoins stood at $13.7 billion at the time of writing.

Edited by: Mehab Qureshi

This story was originally reported by TheStreet on Sep 16, 2025, where it first appeared in the Policy section. Add TheStreet as a Preferred Source by clicking here.