Investors Seek Refuge in Tokenized U.S. Treasury Products

As cryptocurrencies have faced a significant market correction recently, digital asset investors have turned to tokenized U.S. Treasury products for safety.

Since late January, the total market capitalization of Treasury-backed tokens has surged by $800 million, reaching a new all-time high of $4.2 billion as of Wednesday, according to data from rwa.xyz.

Among the notable products:
– Ondo Finance’s (ONDO) offerings, the short-term bond-backed OUSG and USDY tokens, have surged nearly 53% in market value over the past month, approaching a combined total of $1 billion.
– BUIDL, a token from BlackRock and Securitize, experienced a 25% increase to surpass $800 million.
– Franklin Templeton’s BENJI token saw a 16% increase, reaching $687 million.
– Superstate’s USTB token hit $363 million, a remarkable gain of over 63%.

In contrast, Hashnote’s USYC token dropped by over 20% to $900 million, primarily influenced by the decline of the DeFi protocol Usual, following negative investor sentiment. The token backs Usual’s USD0 stablecoin, which fell from a peak of $1.8 billion to below $1 billion since January.

Brian Choe, head of research at rwa.xyz, explained, “The growth of the tokenized treasury market cap during the recent crypto downturn reflects a flight to quality, similar to how traditional investors shift from equities to U.S. Treasuries during economic uncertainty.”

Choe’s analysis compared the market cap growth of tokenized treasuries against stablecoins during different phases of the crypto market—from November to January when the market was bullish, to February when prices corrected.

During this recent bearish period, tokenized treasuries outpaced the growth of stablecoins, contrasting the bullish phase where stablecoins had stronger growth. Choe noted, “This indicates some investors aren’t leaving the ecosystem but are moving capital into safer, yield-producing assets until conditions improve.”