Fed Rate at 4%: Crypto Yield in Dollars Must First Beat U.S. Treasury

The Fed's rate sets a floor that many crypto investors forget to look at. On October 26, a three-month U.S. Treasury bond yielded 4.15% per year. And this without a platform, without a stablecoin, and without any counterparty other than the federal government. Over the previous twelve months, the funding of Binance's BTCUSDT perpetual contract, the base income of dollar-neutral strategies, yielded 3.43%. Therefore, anyone who collected this flow all year took on the risk of the platforms to earn less than the Treasury.

The Fed met on October 28, six weeks after raising its range to 3.75-4.00%. Journal du Coin covers the daily effect of its decision on the price of Bitcoin. This article looks at the other side: what the key rate changes for a crypto investment aiming for dollar income. You will first see why the Treasury bond is the right benchmark, then what the funding and cash-and-carry yield today compared to it. We will then see how each Fed scenario shifts the calculation, and what a euro investor needs to add.

This article is brought to you by DCY. To discover their approach, visit dcy.fund.

Key Points

• A crypto yield in dollars compares to the three-month U.S. Treasury bond, at 4.15% on October 26, 2026. Anything exceeding this rate is the only part that compensates for the risk taken.
• For the twelve months ending September 2026, Binance's BTCUSDT perpetual paid 3.37% in funding, while the three-month bond averaged 3.77%. The premium was negative.
• The cash-and-carry on the December expiry offered about 5.5% annualized on October 27, or 1.3 points above the Treasury before margin and fees.
• For a euro investor, the benchmark becomes the ECB rate, around 2.5%. Covering the dollar costs roughly the spread between the two rates.

The Fed Rate, or the Price of Risk-Free Money

To judge an investment, one looks at what it yields above a solution that requires no effort and carries almost no risk. In dollars, this solution has a name: the short-term U.S. Treasury bond, the T-bill. Its rate closely follows the range set by the Fed. Indeed, banks and money funds constantly arbitrate between the two.

Our article on cash-and-carry already stated the principle in one sentence: the benchmark for this yield is the risk-free rate, not zero. This sentence gains weight when the Fed tightens. In January 2026, the three-month bond yielded 3.6%. After the increase on September 16, it exceeded 4%. It was then trading at 4.15% on October 26 according to daily Treasury reports. Every Fed hike raises the bar that any dollar strategy, including crypto, must clear.

What a strategy earns beyond this rate is called the risk premium. It pays for counterparty risk on platforms, the stablecoin risk serving as collateral, operational risk, and management fees. If it is zero, the investor takes all these risks for free.

What Funding Yielded Against the Treasury

Let’s revisit the data from our article on funding, from October 1, 2025, to September 30, 2026: 3.37% of the notional paid to the seller of the BTCUSDT perpetual at Binance. Over these same twelve months, the three-month Treasury bond yielded an average of 3.77%. Taking the simplest neutral strategy, which consists of buying Bitcoin spot and selling the perpetual, it therefore performed worse than the risk-free investment, even before accounting for margin and fees.

There is a reason for this. On platforms, the funding of a perpetual is not indexed to monetary policy. Binance starts from a fixed reference rate, equivalent to 0.03% per day. The platform only deviates from this when the price of the perpetual significantly diverges from the spot price. This reference rate does not change when the Fed raises rates. Throughout the year, the BTCUSDT funding has remained at this level or below. There were indeed too few leveraged buyers to push it higher.

The last thirty days have slightly changed the picture. Annualized, the payments from the past month amount to 4.1%, roughly at the level of Treasury yields. The premium has shifted from negative to zero, which still does not sufficiently compensate for the risk.

Cash-and-Carry, More Sensitive to Rates

The cash-and-carry on a futures contract works differently. The price of a quarterly contract results from supply and demand, without a formula imposed by the platform. Arbitrageurs who sell it directly compare its yield to the return on their dollars. When rates rise, they demand a higher basis to lock up their capital. Fed rates therefore pass more directly into this price.

On October 27, the BTCUSDT contract on Binance expiring on December 25 was quoted about 0.9% above the spot price, for 59 days. Annualized, the spread comes out to 5.5%. The March 2027 expiration yielded 5.3%. This is 1.2 to 1.3 points above the Treasury bond.

On the actual capital engaged, the calculation tightens. Let’s retain the assumption already used in our previous articles, which is a margin blocked equal to 25% of the short leg. In this case, the 5.5% becomes 4.4%, just slightly above the Treasury, before execution fees on both legs. The premium remains thin. It can increase if the margin itself is placed, or if the position is closed and reopened at the right time. This is precisely the manager's job.

For comparison, Ethena's paid stablecoin, sUSDe, which relies on similar positions, was around 5% at the end of October according to DefiLlama. The order of magnitude is the same, with an additional protocol risk.

Increase, Status Quo, or Decrease in Fed Rates: What Each Scenario Changes

The decision on the Fed rate affects the calculation through two channels, the bar and the fuel.

The bar is the risk-free rate. An increase raises it, a decrease lowers it, a status quo keeps it in place. The effect is mechanical and can be seen in the price of Treasury bonds within hours.

The fuel is the demand for leverage, which finances the basis and the funding. It follows the appetite for risk. A tightening Fed raises the dollar and weighs on bitcoin, as the sessions leading up to the meeting reminded us. Fewer leveraged buyers mean less funding to collect.

The two channels play together. A rise raises the bar as fuel becomes scarce, and the premium tightens on both sides. A drop lowers the bar and tends to reopen the appetite for leverage, which widens the premium. The status quo is only neutral in appearance. Indeed, the tone of the statement shifts expectations for the meeting on December 8 and 9. These expectations are already reflected in the March maturities.

The premium of a neutral dollar strategy is therefore lowest when the Fed tightens and the appetite for leverage falls. This is the situation this autumn.

And for an investor in euros

A French investor placing in dollars adds a variable: the exchange rate. Our article on yield currency quantified this; a yield in dollars can turn into a loss once converted into euros.

To neutralize this risk, one must hedge the dollar. However, this hedge has a cost, roughly equal to the spread between the rates of the two zones. The ECB deposit rate is at 2.50%, and the overnight interbank rate in euros, the €STR, is at 2.44%. With a Treasury bond at 4.15%, the spread exceeds 1.7 points. An investor in euros who hedges their exchange brings the yield of the US Treasury back to around 2.5%, and it is at this level that they must compare a covered dollar strategy.

The logic remains the same. It is about identifying the risk-free placement in one's own currency, then measuring what the strategy yields beyond that, after deducting fees and exchange hedging.

Three Figures to Request

Faced with a yield offer in dollars, crypto or not, three figures are enough to sort through:

1. The net yield after all fees, over a period of at least twelve months, and not an annualized rate over a few weeks.
2. The rate of the three-month Treasury bond over the same period, to measure the premium actually obtained.
3. The currency of calculation, and the cost of hedging if the yield is presented in euros.

A gap of one or two points above the Treasury can justify the risks of a well-managed neutral strategy. A yield that remains below the Treasury, like last year's gross funding, does not compensate for these risks, regardless of the Fed's decision.

This article was brought to you by DCY. Find their dollar strategies at dcy.fund.