Since the Federal Reserve began hiking interest rates to control inflation, the cryptocurrency and stock markets have performed poorly, forcing investors’ interest in US Treasury bonds to rise.
Investors flock to US Treasury bonds
Investors appear to be piling in on US Treasury bonds because of their relative safe haven performance in light of the recent macroeconomic crisis. With interest rates rapidly rising, treasury yields have also been appreciating.
Meanwhile, the current state of the economy has not dampened investors’ appetite for trade whatsoever. Tradeweb reported that the trading volume for September was $25.1 trillion, and average daily volume (ADV) increased by 17.2% on the year-on-year metric.
Although the US government bond activity ADV decreased by 3.8% year-on-year to $129.3 billion, this was because of the institutional and wholesale market activity. Among retailers, there was a record volume due to higher interest rates.
In the last quarter, the treasury yields rose from 2.88% to 3.89%. For context, the flagship digital asset Bitcoin (BTC) dropped about 2% of its value, while Ethereum (ETH) gained over 90%, according to CryptoSlate data. The network’s migration to proof-of-stake fueled ETH’s positive price performance.
Meanwhile, the year-on-year performance shows why more people opt for Treasury bonds over BTC and ETH. The ten-year treasury chart showed that yield grew to 3.89% from 1.61% within the past year, while the top two digital assets shed over 60% of their values.
Treasury Direct’s website also has more web traffic than Ethereum.org. The Treasury Direct Quarterly website visits surpassed that of Ethereum on May 29 -as of the end of September, it was 1.8x higher.
On May 29, 2022 Treasury Direct’s quarterly website traffic surpassed Ethereum’s. Now it is 1.8x larger.
Very exciting project. Congratulations to the team pic.twitter.com/Z0nkJx8iId
— Alex Good (@goodalexander) October 10, 2022
Dow Jones is more volatile than BTC
Zerohedge data revealed that the Dow Jones index was more volatile than Bitcoin as of October 07. The Dow Jones index tracks the top 30 industrial stocks.
The Fed finally did it, 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) October 7, 2022
This means that Bitcoin’s infamous volatility appears to be cooling down after mirroring stocks’ performance for several months. It also means that the flagship digital asset is maturing and becoming more stable.
Meanwhile, the cooling could be due to the decline in Bitcoin’s value. The asset has traded within the same range for the past three months.