Key facts: BlackRock leads this market with its BUIDL bond, which «lives» on Ethereum. Ethereum, Polygon, Stellar, and Solana are some networks that host tokenized bonds. Tokens that offer indirect exposure to the Treasury bonds of the largest economic power, the United States, have gained great traction. So far in 2024 alone, the value of these cryptoassets in circulation went from less than 720 million to 1.5 billion dollars (USD). With this doubling of value, This market niche shows the relevance that real world assets (RWA) are taking on.. This term refers to those tokens that represent traditional assets, be it real estate, precious metals, bonds such as this case, among others. RWAs, known in Spanish as “real world assets”, provide an innovative way to invest in traditional finance assets, facilitating their access and allowing the acquisition of fractional properties.
The bond token that currently has the highest value is BUIDL, which has earned more than USD 460 million, a figure it reached in just two months since its launch. This can be seen in the following graph from the Rwa.xyz on-chain data explorer.
Value of tokenized bonds in circulation. Source: Rwa.xyz. As reported by BitcoinDynamic, BUIDL is a tokenized bond investment fund on the Ethereum network. This was launched by BlackRock, the company with the most assets under management in the world, which explains the great traction it received in its still short life.
BlackRock's entry into this RWA niche represents a significant advance for the market, which could continue to motivate its growth. In addition, the company stands out for issuing a bitcoin (BTC) exchange-traded fund (ETF), which since its launch five months ago has become the largest in the world. Currently, almost 75% of the capitalization of tokenized bonds is in Ethereum. As seen below, it is then followed by the Stellar, Solana and other networks.
Capitalization of tokenized bonds per network. Source: Rwa.xyz.
US monetary policy drives demand for tokenized bonds
Since a year ago, The United States maintains the highest interest rates it has recorded in almost two decadesas seen below.
Interest rates in the United States. Source: TradingView. This monetary policy tends to boost the value of the dollar and the demand for Treasury bonds, while it tends to discourage that of risk markets. This scenario partly explains the value that tokenized bonds have gained, while the stock and bitcoin markets remain in a period of consolidation. Particularly, the digital currency has been lateralizing for three months in a price zone adjusted below its new all-time high of USD 73,700. The economic powerhouse Federal Reserve (Fed) has planned a rate cut for sometime in 2024 if inflation continues to decline. Although more reductions were expected, it should be taken into account that this could trigger effects on the markets.