As cryptocurrencies have faced significant challenges during the recent market downturn, investors in digital assets have turned to tokenized U.S. Treasury products for stability.
Since the end of January, the overall market capitalization of Treasury-backed tokens has surged by $800 million, reaching a new all-time high of $4.2 billion on Wednesday, according to market data.
Products from real-world asset platform Ondo Finance, including the short-term bond-supported OUSG and USDY tokens, approached a combined value of nearly $1 billion, marking a 53% increase in their market value over the last month. The BUIDL token, co-issued by asset manager BlackRock and tokenization company Securitize, experienced a 25% rise in the same timeframe, exceeding $800 million. Franklin Templeton’s BENJI token saw its valuation expand to $687 million, a 16% rise, while Superstate’s USTB reached $363 million, up more than 63%.
However, Hashnote’s USYC was a significant exception, losing over 20% of its market cap to drop to $900 million, largely attributed to the decline of the DeFi protocol Usual following negative investor sentiment. This token serves as the primary asset backing Usual’s USD0 stablecoin, which fell below $1 billion in supply from a January peak of $1.8 billion.
According to Brian Choe, head of research, the expansion of the tokenized treasury market amidst the current crypto downturn indicates a shift towards quality investments, akin to how traditional investors transition from equities to U.S. Treasuries during periods of economic instability.
His observations compared the growth metrics of tokenized treasuries with stablecoins from November through January, during a crypto upswing, to the trends following the price corrections in February.
During this bearish phase, tokenized treasuries increased at a faster pace than stablecoins, contrasting with the previous bullish trend when stablecoins had surpassed the growth of treasury tokens.
“This indicates that some investors are not leaving the ecosystem but are reallocating their funds into safer, yield-generating assets until market conditions improve,” Choe noted.