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While bitcoin remains pegged above $80,000, another interest-sensitive corner of the crypto market is booming and could siphon capital from other coins.
The total value locked in tokenized government bonds has risen to $15.35 billion, topping the peak in mid-April of around $15.10 billion, according to data from rwa.xyz.
This comes as markets are pricing in a higher likelihood of a rate hike by the Federal Reserve (yes, a rise in borrowing costs), a marked shift from expectations of rapid rate cuts introduced earlier this year.
“The cut in June just became significantly more difficult to defend, and the allocator positioning we marked – the capital was sitting in [BlackRock’s] BUIDL and tokenized Treasuries instead of spot crypto – going to look prescient on Friday,” Iggy Ioppe, co-founder of Polygon Ventures, said in an email.
Flows into yield-bearing tokenized Treasuries could increase further if today’s US producer price index (PPI) points to persistent inflationary pressures in the pipeline. Consensus is for the April print to come in at 4.9% year-on-year, up from 4.0% in March.
An elevated reading will increase the Fed’s expectations for rate hikes and represent a headwind for risk assets. How bitcoin responds remains to be seen, especially since it largely held steady above $80,000 after Tuesday’s warmer-than-expected CPI print.
While noting BTC’s resilience, analysts at Marex warned that further gains may be difficult if inflation continues to rise.
“That’s the limitation of crypto: it can hold, but it will struggle to trend higher if it’s real [inflation] interest rates will continue to rise,” said analysts at Marex.
Miners also present a potential headwind.
“If major miners are reporting big losses and pivoting towards AI, it usually means they may need to manage balances more actively, which can translate into more spot supply at rallies. It’s not a crash trigger, but it can cover upside in a choppy macro band,” they noted.
In the broader market, smaller coins such as ING, DOT, ATOM and TRUMP added 5% or more, indicating a rotation of capital to selective tokens. Majors like ether (ETH), solana (SOL) and XRP remain choppy.
Bitcoin and ether volatility indices continue to point to near-term calm ahead of three major events: the PPI report, the Clarity Act vote and the meeting between President Donald Trump and his Chinese counterpart, Xi Jingping.
In traditional markets, WTI crude oil futures climbed back above $100, while copper rose to near-record highs, both pointing to more commodity-led inflation ahead. Pay attention!
Read more: For analysis of today’s activity in altcoins and derivatives, see Crypto Markets Today. For a comprehensive list of events this week, see CoinDesk’s “Crypto Week Ahead.”
What is trending
Today’s signal
Bitcoin appears to be at a pivot where the recovery from the February lows stalls near the 200-day simple moving average (SMA) around $82,300 and the upper limit of an ascending channel.
Momentum has stalled, just as macro uncertainty surrounding inflation and Federal Reserve policy is intensifying.
A bearish resolution would mean that BTC would not break above the 200-day moving average and slip below $75,000, which was widely cited as a key level in February-March. That could encourage systematic sellers back into the market, especially if rising government interest rates continue to tighten financial conditions and weigh on risk appetite.
On the bullish side, a decisive move above the 200-day moving average would confirm a bull market, potentially allowing a rally to as high as $92,000.
