As Cryptocurrencies Have Been Battered by a Broad-Market Correction, Digital Asset Investors Sought Refuge in Tokenized U.S. Treasury Products

Since late January, the combined market capitalization of Treasury-backed tokens grew $800 million to hit a fresh all-time record of $4.2 billion

Crypto investors pulled out of tokens and poured money into tokenized U.S. Treasury products as digital assets got battered in a broad-market correction over the past weeks, data showed.

The combined market capitalization of Treasury-backed tokens rose $800 million since late January to hit a fresh all-time record of $4.2 billion on Wednesday, data source rwa.xyz showed.

Real-world asset platform Ondo Finance's (ONDO) products, the short-term bond-backed OUSG and USDY tokens, climbed to just shy of $1 billion, a 53% surge in market value over the past month. BUIDL, the token issued jointly by asset manager BlackRock and tokenization firm Securitize, gained 25% during the same period to surpass $800 million.

Asset manager Franklin Templeton's BENJI token expanded to $687 million, a 16% increase, while Superstate's USTB hit $363 million, up more than 63%.

A notable outlier was Hashnote's USYC, which lost over 20% of its market cap to reach $900 million, predominantly due to DeFi protocol Usual's decline after investor backlash. The token is the main backing asset of Usual's USD0 stablecoin, which dropped below $1 billion supply from its January peak of $1.8 billion.

"We believe 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," said Brian Choe, head of research at rwa.xyz.

Choe based his analysis on comparing the market cap growth of tokenized treasuries with stablecoins between November and January, when crypto markets were in a strong upcycle, and from February when prices slid.

During the recent bearish period, tokenized treasuries grew faster than stablecoins, contrary to the bullish phase, when stablecoin growth outpaced the treasury token market.

"This signals some investors aren's exiting the ecosystem but rather rotating capital into safer, yield-bearing assets until market conditions improve," Choe said.