Crypto Investors Flock to Tokenized Treasuries Amid Market Downturn

As cryptocurrency markets faced a broad correction in recent weeks, digital asset investors sought safety in tokenized U.S. Treasury products. Since late January, the market capitalization of Treasury-backed tokens surged by $800 million, hitting a record $4.2 billion, according to rwa.xyz.

Ondo Finance's OUSG and USDY tokens, backed by short-term bonds, saw a 53% increase, nearing $1 billion in combined market value. BlackRock and Securitize’s BUIDL token climbed 25% to over $800 million, while Franklin Templeton's BENJI token rose 16% to $687 million. Superstate’s USTB recorded a 63% jump to $363 million.

A notable exception was Hashnote’s USYC, which dropped 20% to $900 million after DeFi platform Usual faced investor backlash, causing its USD0 stablecoin supply to plunge below $1 billion from January’s peak of $1.8 billion.

Brian Choe, head of research at rwa.xyz, noted that the surge in tokenized Treasury demand mirrors traditional market trends, where investors shift from equities to Treasuries during uncertainty. He highlighted that during the crypto rally from November to January, stablecoins expanded faster than tokenized Treasuries. However, during the recent downturn, Treasury-backed tokens outpaced stablecoin growth, signaling that investors are not fully exiting crypto but rotating capital into yield-bearing assets.

This trend underscores the growing appeal of tokenized real-world assets (RWAs) as a hedge against market volatility. With institutional adoption rising and regulatory clarity improving, tokenized Treasuries could become a cornerstone of crypto market stability.