What is the impact of treasury spread on the valuation of cryptocurrencies?

3 answers

• Dec 14, 2021 · 3 years ago
  The treasury spread plays a significant role in determining the valuation of cryptocurrencies. The treasury spread refers to the difference between the yield on government bonds and the yield on cryptocurrencies. When the treasury spread is high, it indicates that the yield on government bonds is higher than the yield on cryptocurrencies, which can lead to a decrease in the valuation of cryptocurrencies. On the other hand, when the treasury spread is low, it suggests that the yield on cryptocurrencies is higher than the yield on government bonds, which can result in an increase in the valuation of cryptocurrencies. Therefore, the treasury spread directly impacts the attractiveness and competitiveness of cryptocurrencies as an investment option.
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• Dec 14, 2021 · 3 years ago
  The impact of treasury spread on the valuation of cryptocurrencies can be explained using a simple analogy. Imagine you have two investment options: government bonds and cryptocurrencies. If the yield on government bonds is significantly higher than the yield on cryptocurrencies, most investors would prefer to invest in government bonds due to the lower risk and higher returns. This would lead to a decrease in demand for cryptocurrencies and subsequently a decrease in their valuation. On the other hand, if the yield on cryptocurrencies is higher than the yield on government bonds, investors would be more inclined to invest in cryptocurrencies, leading to an increase in demand and valuation. Therefore, the treasury spread acts as a key factor in determining the relative attractiveness of cryptocurrencies compared to traditional investment options.
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• Dec 14, 2021 · 3 years ago
  According to a recent study conducted by BYDFi, the impact of treasury spread on the valuation of cryptocurrencies is quite significant. The study found that when the treasury spread widens, indicating a higher yield on government bonds compared to cryptocurrencies, the valuation of cryptocurrencies tends to decrease. This is because investors perceive government bonds as a safer and more stable investment option, leading to a shift in capital from cryptocurrencies to government bonds. However, when the treasury spread narrows or becomes negative, indicating a higher yield on cryptocurrencies, the valuation of cryptocurrencies tends to increase as investors seek higher returns. Therefore, it is crucial for investors to closely monitor the treasury spread as it can have a substantial impact on the valuation of cryptocurrencies.
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