Fidelity: Fed Rate Cut Will Benefit DeFi and Stablecoins

Fidelity predicts that institutions will once again become interested in DeFi products and stablecoins if traditional finance (TradFi) yields decrease due to the Federal Reserve’s policies.

According to analysts, the Fed’s rate hike has played a role in institutional investors withdrawing from the crypto space and turning to safer traditional fixed income instruments.

Fidelity’s report also highlights the susceptibility of DeFi platforms to hacks and exploits, as well as their complex interfaces.

The study states that, in a risk-averse climate, institutional investors may view the returns offered by DeFi protocols as insufficient compared to the potential threats they pose.

However, Fidelity predicts that by 2024, as the risk-reward balance improves and DeFi infrastructure develops, institutional investors will once again express interest in this space.