Treasury Yield Surge Rattles Ethereum’s Staking Appeal
The recent surge in the 10-year US Treasury Yield, reaching levels not seen since 2007, has significantly impacted both equities and cryptocurrencies, with Ethereum feeling a more pronounced effect than Bitcoin.
However, these staking rewards have dropped to an annualized rate of 3.5%, approaching their lowest point in the last 10 months and well below their recent peak of over 8%. This return is now less attractive than the 5% yields offered by US government bonds, highlighting the waning appeal of the cryptocurrency market due to rising traditional interest rates.
In terms of performance, Ethereum’s year-to-date increase of 32% lags behind Bitcoin’s impressive 77% rally.
In the past month, during a period marked by a roughly 50 basis point increase in the US 10-year Treasury yield, Ethereum has seen a decline of over 5%, while Bitcoin has gained 8%.
The attractiveness of ETH staking has diminished as more investors turned to it following Ethereum network upgrades. Platforms like Lido and Rocket Pool have become dominant in the decentralized finance sector of the cryptocurrency industry.
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Staking quantity plummeted by 67% to 1.2 million in September compared to May, according to data from 21Shares AG.
While Ethereum’s price has risen by 2% amid a broader crypto market upturn, it still faces a crucial resistance level at $1,600. However, with over 100 million active Ethereum addresses, there may be potential for a turnaround ahead.
This data underscores how the cryptocurrency market is evolving in response to shifts in traditional financial assets and interest rates.