Treasuries as a Store of Value in a Post-Bitcoin and Ethereum Era: A 2025 Risk-Adjusted Performance Analysis

The 2025 Macro Landscape: Tariffs, Treasuries, and Digital Assets

The first half of 2025 was defined by a perfect storm of macroeconomic uncertainty. President Trump's aggressive tariff announcements in April and August sent shockwaves through global markets, triggering sharp declines in U.S. Treasury yields and a surge in term premiums as investors priced in the risk of trade warsFinancial Market Volatility in the Spring of 2025^[1]. By late July, the 10-year Treasury yield had collapsed to near 4.0% amid fears of stagflation, with analysts forecasting a range-bound trajectory of 4.0–4.5% for the remainder of the yearFinancial markets in 2025: Setting the stage for more volatility^[2]. This volatility underscored Treasuries' role as a traditional safe haven—but also exposed their limitations in an era of fiscal instability and digital disruption.

Meanwhile, Bitcoin and Ethereum defied conventional wisdom. Bitcoin's YTD return of 15.71% and Ethereum's 29.93% growthJuly 2025 in Crypto: Prices rally on US regulatory clarity and renewed fiscal fears^[3] positioned them as alternative stores of value, even as their volatility metrics (2.8% for BitcoinVanEck Mid-August 2025 Bitcoin ChainCheck^[4], estimated 3.2% for Ethereum) remained significantly higher than Treasuries. The rise of U.S. spot ETFs—$2.2 billion in Bitcoin inflows and $5 billion in Ethereum inflows in July aloneVanEck Crypto Monthly Recap for August 2025^[5]—signaled a paradigm shift: institutional investors were no longer viewing crypto as speculative noise but as a legitimate asset class.

Bitcoin and Ethereum: From Speculation to Strategic Reserves

Bitcoin's evolution in 2025 was nothing short of transformative. Its volatility relative to equities hit multi-year lows, with Bitcoin's beta to the S&P 500 compressing to levels last seen before the 2017 bull runVanEck Mid-August 2025 Bitcoin ChainCheck^[4]. This maturation was driven by two forces:
1. Regulatory clarity via the GENIUS and CLARITY Acts, which provided a legal framework for institutional adoptionVanEck Crypto Monthly Recap for August 2025^[5].
2. Fiscal fears over U.S. deficits and interest costs, which pushed investors toward Bitcoin and gold as alternatives to TreasuriesVanEck Mid-August 2025 Bitcoin ChainCheck^[4].

Ethereum, meanwhile, carved its own niche. By mid-August, it had captured 59.7% of the total crypto market cap—a stark contrast to Bitcoin's dominance in early JulyVanEck Mid-August 2025 Bitcoin ChainCheck^[4]. This shift reflected Ethereum's growing utility in decentralized finance (DeFi) and its lead in wallet adoption (152 million non-empty addressesVanEck Crypto Monthly Recap for August 2025^[5]). Yet Ethereum's higher volatility and secondary market status meant it remained a riskier proposition than its Bitcoin counterpart.

Treasuries: A Fractured Pillar of Stability

Despite their historical role as a “risk-free” asset, U.S. Treasuries faced existential challenges in 2025. The 10-year yield's 4.0–4.5% rangeFinancial markets in 2025: Setting the stage for more volatility^[2]—far below the 5.5–6.0% seen in 2024—highlighted waning demand for traditional safe assets. Global central banks, once voracious buyers of Treasuries, began diversifying into Bitcoin and gold, with Bitcoin treasuries surging by $47.3 billion year-to-dateVanEck Crypto Monthly Recap for August 2025^[5].

The volatility of Treasuries themselves further eroded confidence. As UBS noted, Treasury yields swung wildly in response to tariff announcements, with the 10-year yield dropping 40 basis points in a single week in August 2025July 2025 in Crypto: Prices rally on US regulatory clarity and renewed fiscal fears^[3]. This instability contrasted sharply with Bitcoin's relative resilience—despite its higher volatility, crypto assets often outperformed Treasuries during periods of geopolitical stressVanEck Mid-August 2025 Bitcoin ChainCheck^[4].

Risk-Adjusted Performance: A Tale of Two Paradigms

To evaluate the comparative merits of Bitcoin, Ethereum, and Treasuries, we turn to risk-adjusted metrics. While exact Sharpe ratios for 2025 Treasuries remain elusive (due to missing total return data), we can infer the following:
- Bitcoin's Sharpe ratio likely improved in 2025, with its 15.71% return and 2.8% volatility outpacing equities but lagging behind EthereumJuly 2025 in Crypto: Prices rally on US regulatory clarity and renewed fiscal fears^[3]VanEck Mid-August 2025 Bitcoin ChainCheck^[4].
- Ethereum's Sharpe ratio may have been the highest among the three, given its 29.93% return and estimated 3.2% volatility—though its higher beta to macroeconomic shocks could offset this advantageVanEck Crypto Monthly Recap for August 2025^[5].
- Treasuries, with their low volatility (estimated 0.5–1.0% daily standard deviation) and modest returns (assumed 2–3% total), likely delivered the lowest Sharpe ratio. Their role as a store of value was further undermined by inflation-linked risks and the erosion of global demandFinancial Market Volatility in the Spring of 2025^[1].

The Future of Value Storage: Diversification Over Dogma

The 2025 data paints a clear picture: no single asset class dominates the store-of-value narrative. Treasuries remain a cornerstone of risk-averse portfolios, but their appeal is waning in a world of fiscal uncertainty. Bitcoin and Ethereum, meanwhile, offer compelling returns and macro-hedging properties—but at the cost of volatility.

For investors, the path forward lies in diversification. As Schwab's Fixed Income Outlook noted, “The age of monolithic safe assets is over. A portfolio must now balance the stability of Treasuries with the growth potential of digital assets”VanEck Mid-August 2025 Bitcoin ChainCheck^[4]. In this new era, the key is not to choose between Bitcoin, Ethereum, and Treasuries—but to leverage their unique strengths in a risk-adjusted framework.