Analysts talk about the impact of tokenized cryptocurrency funds on the market
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Johny Smith
2024/09/20
3 mins read
According to Kaiko, a slew of tokenized funds have launched in the past 18 months that provide exposure to traditional debt instruments like U.S. Treasuries. Among them is BlackRock’s BUIDL fund, which has become the largest on-chain fund by assets under management, raising more than $520 million since its launch in March in partnership with Securitize.
Other major funds include Franklin Templeton’s FBOXX, Ondo Finance’s OUSG and USDY, and Hashnote’s USYC, all of which offer yields that match the Fed’s rate. The rise in popularity of these funds has led to increased activity in both on-chain flows and the secondary market for “linked tokens,” experts say.
For example, the Ondo Finance governance token (ONDO) hit a record price of $1.56 in June amid inflows into BUIDL and increased interest in on-chain funds. However, with the changing situation in the US interest rate market, this may change.
“Since early August, amid the sell-off, there has been a growing view that the Fed is lagging and needs to cut rates more aggressively to avoid a recession. Markets are already pricing in a 100 basis point rate cut in 2024. Expectations for a cut have been reinforced by weaker U.S. inflation data last week, increasing the likelihood of a softening of the narrative in September,” analysts said.
If the Fed cuts nominal rates but inflation falls at the same rate or faster, real rates could remain stable or even rise, experts say.
“If they remain stable, the stimulus impact of the Fed’s rate cuts may be less significant than expected. In such a situation, Treasuries may remain attractive compared to risk assets, as investors will prefer liquidity and safety,” the researchers concluded.
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