US Treasury bonds, with a 10-year maturity, have reached their highest level since 2007, surpassing 4.9%, shaking risky assets such as stocks and cryptocurrencies. However, a closer look reveals that this increase in Treasury bonds has had a greater impact on Ethereum (ETH), the second-largest cryptocurrency, than on Bitcoin (BTC).
Ethereum offers cryptocurrency investors the opportunity to earn staking rewards by staking their ETH assets on the network. However, the yield from this staking process has dropped to a yearly low of 3.5%, significantly below the previous peak of over 8% and the lowest level in the past 10 months.
The yield from ETH staking is currently below the approximately 5% yield offered by US Treasury bonds, which form the foundation of the traditional financial system. This inconsistency shows how the allure of the cryptocurrency market, which sometimes exhibits high volatility due to the departure from the ultra-low interest rate environment prevalent during the pandemic, has diminished.
While the price of ETH has risen by 32% since the beginning of the year, the price of BTC has increased by 77% during the same period. On the other hand, when there was a 50 basis point increase in the yield of US 10-year Treasury bonds last month, ETH experienced a decrease of over 5% in price, while BTC increased by 8%.
ETH staking gained popularity starting from September of last year, following updates to the Ethereum network. However, the amount of ETH staked decreased by 67% in September compared to May, reaching 1.2 million.
At the time of writing, the price of ETH is around $1,580 and attempting to break the resistance around $1,600. The fact that the number of active wallet addresses on the Ethereum network has surpassed 100 million indicates that this resistance may be broken soon.