Originally published on: August 15, 2024
The rising popularity of crypto around the world, with a 34% increase in holders since 2023, has fueled the demand for stable and secure digital assets. Tokenized United States Treasurys offer users the opportunity to access government bonds within the crypto ecosystem. The market for tokenized products has experienced rapid growth, with total market capitalization soaring by over 150% year-to-date since January 2023.
According to an analysis by Cointelegraph, utilizing statistical models such as ARIMA, GARCH, and linear regression, the projected capitalization of 12 tokenized US Treasury products is on the rise. The ARIMA model predicts a market capitalization of $2.12 billion, GARCH forecasts $3.93 billion, while linear regression estimates $2.47 billion. A combined analysis suggests a market capitalization of $2.66 billion by the end of 2024.
Decentralized autonomous organizations (DAOs) have shown interest in investing in tokenized US Treasurys, with DAOs like Arbitrum and MakerDAO planning significant allocations. Arbitrum is set to invest around $25 million or 1% of its treasury, while MakerDAO aims for a $1 billion investment, approximately 19% of its treasury. By diversifying their treasuries with real-world assets like tokenized US Treasurys, DAOs are enhancing long-term stability.
The potential for additional inflows into the tokenized US Treasurys market is significant if more DAOs follow suit. With total DAO treasuries amounting to $24.3 billion, allocations of 1%, 5%, and 10% to tokenized US Treasurys could result in additional inflows of $243 million, $1.22 billion, and $2.43 billion, respectively.
As demand for tokenized US Treasurys continues to grow, challenges may arise with the Federal Reserve expected to reduce interest rates. This could impact the appeal of US Treasurys as an investment. However, the market remains optimistic about the potential for tokenized US Treasurys to surpass $3 billion by the end of 2024, offering investors a low-risk and yield-bearing digital asset option.