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Ethereum Bears the Brunt of Soaring US Treasury Yields, Lagging Behind Bitcoin

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“The surge in US Treasury yield is turning the tide against Ethereum, putting it at a disadvantage compared to Bitcoin, as investors flock to safer assets.”

The recent surge in the 10-year US Treasury yield has had a significant impact on risk-ON assets like equity and cryptocurrency. However, a closer analysis reveals that Ethereum, the world’s second-largest cryptocurrency, has been more affected by the rise in Treasury yield compared to Bitcoin.

One of the reasons for this is the drop in staking rewards for Ethereum. Staking allows crypto investors to earn rewards by pledging their ETH holdings on the Ethereum network. However, the staking payout on these tokens has dropped to an annualized 3.5%, nearing the lowest level in 10 months. This return is significantly below the 5% yields provided by US government bonds, highlighting the shift away from ultra-low interest rates during the pandemic.

In contrast, Bitcoin has seen an impressive rally of 77% year-to-date, compared to Ethereum’s 32% increase. Over the past month, while the US 10-year Treasury yield increased by 50 basis points, Ethereum saw a decline of more than 5%, while Bitcoin registered an 8% gain.

The popularity of ETH staking surged following the Ethereum network upgrades last year. However, the increase in staking has reduced the attractiveness of Ethereum from a yield perspective, especially in comparison to rising yields in traditional financial assets. The quantity of staked Ether coins has declined by 67% to 1.2 million in September compared to May.

Despite these challenges, the Ethereum price is currently up 2% amid a broader surge in the crypto market. Breaking the crucial resistance level of $1,600 could be a turning point for Ethereum. Additionally, the number of active Ethereum addresses has surpassed 100 million, indicating potential growth ahead.

It is important to conduct thorough market research before investing in cryptocurrencies. The content presented here may include the personal opinion of the author and is subject to market conditions. The author and the publication do not hold any responsibility for personal financial losses.

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