Ondo price boosted by rising assets, OUSG’s Sky application

Ondo Finance’s token continued its recovery after developers submitted a proposal to bring the OUSG stablecoin to Sky (formerly MakerDAO).

Ondo Finance (ONDO) rose for the second day in a row, reaching $0.7500, its highest level since August 25.

In a statement, Ondo Finance developers said they have partnered with Blackrock and Securitize to add the OUSG offering to the Spark Tokenization Grand Prix, which aims to support $1 billion in tokenized assets.

📉 Falling Interest Rates A Boon For Yieldcoins 📈

There is a misconception that lower interest rates will hurt tokenized Treasury bonds (yieldcoins). The argument is that investors will chase higher-risk options like corporate bonds, private credit, or even crypto lending. This…

— Nathan Allman 🌊 (@nathanlallman) September 20, 2024

Ondo’s OUSG is a tokenized product with over $227 million in assets that offers monthly rewards to its holders.

Its annual APY is 5.11%, derived from US government treasuries through the Blackrock USD Institutional Digital Liquidity Fund. It is open to institutional investors and charges a 0.15% fee.

Ondo Finance also operates the more popular US dollar yield token, which yields 5.35% and has over $400 million in assets. Unlike OUSG, USDY is only available to institutional investors.

The new offering comes at a time when total assets at Ondo Finance have reached a record high of $616 million, with most of these assets on the Ethereum chain, followed by Solana, Mantle, and Aptos.

One of the key concerns for Ondo Finance is that it could lose assets as investors move away from government bonds once the Federal Reserve begins cutting interest rates.

The Fed made a big 0.50% cut in its decision last week and hinted that more was on the way. As a result, the benchmark 10-year yield has fallen to 3.7% from this year’s peak of above 4.6%.

However, Ondo Finance CEO Nathan Allman rejected the idea that lower interest rates would lead to a rotation into riskier assets. In an X thread, he noted that yield tokens like Ondo would benefit as rates start to fall as investors turn to riskier assets like crypto. He referred to the USDC stablecoin, which added billions to its holdings when the Fed began cutting rates in 2020.

📉 Falling Interest Rates A Boon For Yieldcoins 📈

There is a misconception that lower interest rates will hurt tokenized Treasury bonds (yieldcoins). The argument is that investors will chase higher-risk options like corporate bonds, private credit, or even crypto lending. This…

— Nathan Allman 🌊 (@nathanlallman) September 20, 2024

Ondo reverses 50-day moving average

The Ondo token dropped to as low as $0.54 earlier this month when most coins were pulling back. It has now bounced back, surpassing the 50-day moving average and the 61.8% Fibonacci retracement point.

The Relative Strength Index and moving average convergence/divergence also remained bullish, a sign that the token is gaining momentum.

On the other hand, while the volume in the spot market continued to increase, the amount of open interest in futures transactions increased to $107 million, its highest level since August 25.

Therefore, Ondo is likely to continue its rise, with the next reference level being the 50% retracement point at $0.8392.