Excitement for crypto is waning as investors pile into bonds

by Arthur · October 10, 2022

Since the Federal Reserve began raising interest rates to control inflation, the cryptocurrency and stock markets have underperformed, forcing investors’ interest in US Treasuries to increase.

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Investors flock to US Treasuries

Investors appear to be piling into US Treasuries due to their relative safe haven in light of the recent macroeconomic crisis. With interest rates rapidly increasing, government interest rates have also increased.

Meanwhile, the current state of the economy has not dampened investors’ appetite for trading whatsoever. Tradeweb reported that trading volume for September was $25.1 trillion, and average daily volume (ADV) was up 17.2% year-over-year.

Although US Treasury bond activity ADV fell 3.8% year-on-year to $129.3 billion, this was due to activity in the institutional and wholesale markets. Among retailers, there was record volume due to higher interest rates.

In the last quarter, government interest rates rose from 2.88% to 3.89%. For context, flagship digital asset Bitcoin (BTC) dropped roughly 2% of its value, while Ethereum (ETH) surged over 90%, according to CryptoSlate data. The network’s migration to proof-of-stake drove ETH’s positive price performance.

Meanwhile, have performance from year to year shows why more people choose government bonds over BTC and ETH. The ten-year Treasury chart showed yields grew to 3.89% from 1.61% over the past year, while the top two digital assets lost over 60% of their values.

Treasury Direct’s website also has more web traffic than Ethereum.org. Treasury Direct Quarterly website visits surpassed those of Ethereum on May 29 – by the end of September it was 1.8 times higher.

On May 29, 2022, Treasury Direct’s quarterly website traffic surpassed Ethereum’s. Now it is 1.8 times larger.

Very exciting project. Congratulations to the team pic.twitter.com/Z0nkJx8iId

— Alex Good (@goodalexander) 10 October 2022

Dow Jones is more volatile than BTC

Zerohedge data revealed that the Dow Jones was more volatile than Bitcoin as of October 7. The Dow Jones index tracks the top 30 industrial stocks.

The Fed finally did, they broke the market:

The Dow Jones (30 largest industrial stocks on planet earth) is officially more volatile than bitcoin pic.twitter.com/BfveiMYZy2

— zerohedge (@zerohedge) 7 October 2022

This means Bitcoin’s notorious volatility appears to be cooling down after mirroring the stock’s performance for months. It also means that the flagship’s digital assets are maturing and becoming more stable.

Meanwhile, the cooling may be due to the decline in Bitcoin’s value. The asset has traded within the same range for the past three months.