As Cryptocurrencies Have Been Battered, Digital Asset Investors Sought Refuge in Tokenized U.S. Treasury Products

As cryptocurrencies have been battered in a broad-market correction over the past weeks, digital asset investors sought refuge in tokenized U.S. Treasury products.

Cryptocurrency prices have been battered by a broad-market correction over the past weeks, pushing digital asset investors to seek refuge in tokenized U.S. Treasury products.

The combined market capitalization of Treasury-backed tokens hit a fresh all-time record of $4.2 billion on Wednesday, up from $3.4 billion since late January, data source rwa.xyz shows.

Real-world asset platform Ondo Finance’s (ONDO) products, the short-term bond-backed OUSG and USDY tokens, grew to just shy of $1 billion combined, 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 saw its market cap shrink by over 20% to $900 million, mainly due to DeFi protocol Usual’s token falling sharply after investor backlash. The token is the main backing asset for Usual’s USD0 stablecoin, which dropped below $1 billion in outstanding supply from its January peak of $1.8 billion.

“We suspect the increase in tokenized treasury market cap during the recent crypto downturn is due to a flight to quality, similar to how traditional investors tend to move from equities to U.S. Treasuries during periods of 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 rallying, and from February when prices corrected.

During the recent bearish period, tokenized treasuries grew faster than stablecoins, which is the opposite of what happened during the bullish phase, where stablecoin growth outpaced the treasury token market.

“This suggests that some investors are not necessarily exiting the ecosystem but rather rotating capital into safer, yielding assets like U.S. Treasuries while waiting for market conditions to improve,” Choe added.