Tokenized Treasuries hit $15 billion as bitcoin stalls, Fed rate-rise concerns build

This is an excerpt from CoinDesk newsletter 'Daybook.' Sign up here, if you haven't already.

While bitcoin BTC$80,949.32 remains pinned above $80,000, another interest rate-sensitive corner of the crypto market is booming and may suck capital out of other coins.

The total value locked in tokenized Treasuries has surged to $15.35 billion, topping the mid-April peak of around $15.10 billion, according to rwa.xyz data.

This comes as markets price in a higher probability of a Federal Reserve interest-rate hike (yes, an increase in borrowing costs), a stark shift from expectations for rapid rate cuts baked in earlier this year.

"The June cut just got significantly harder to defend, and the allocator positioning we flagged - capital sat in [BlackRock's] BUIDL and tokenized T-bills rather than spot crypto - is going to look prescient by Friday," Iggy Ioppe, co-founder of Polygon Ventures, said in an email.

Flows into yield-bearing tokenized Treasuries could rise further if today's U.S. 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 would add to Fed rate-hike expectations and pose a headwind to risk assets. How bitcoin reacts remains to be seen, especially as it held largely steady above $80,000 after Tuesday's hotter-than-expected CPI print.

While noting BTC's resilience, analysts at Marex warned that further gains may be difficult if inflation continues to climb.

"That is the constraint for crypto: it can hold, but it will struggle to trend higher if real [inflation] rates keep grinding up," analysts at Marex said.

Miners, too, present a potential headwind.

"If large miners are reporting big losses and pivoting toward AI, it usually means they may need to manage balance sheets more actively, which can translate into more spot supply on rallies. That is not a crash trigger, but it can cap upside in a choppy macro tape," they noted.

In the broader market, smaller coins such as ING, DOT, ATOM and TRUMP added 5% or more, pointing to a rotation of capital into selective tokens. Majors like ether (ETH), solana (SOL), and XRP remain choppy.

Bitcoin and ether volatility indexes continue to point to near-term calm ahead of three major events: the PPI report, the Clartiy Act vote and the meeting between President Donald Trump and his Chinese counterpart, Xi Jingping.

In traditional markets, WTI crude oil futures bounced back above $100, while copper rose to near-record highs, both pointing to more commodity-led inflation ahead. Stay alert!