According to data from crypto price tracker CoinGecko, the market capitalization of tokenized gold assets surpassed $1 billion on Tuesday as the price of gold approached its all-time high.
Tokenized gold is a type of stablecoin pegged to gold’s value. These blockchain-based tokens represent ownership of physical gold that is managed by the issuer. It provides investors with exposure to the precious metal without the management expenses of an exchange-traded fund (ETF) or the storage burden of gold bullion.
The two biggest gold stablecoins are Pax gold (PAXG), issued by Paxos Trust Company based in New York, and tether gold (XAUT), issued by Tether, the same company responsible for the $80 billion-backed stablecoin USDT. According to CoinGecko data, PAXG and XAUT have respective market capitalizations of $518 million and $499 million at the time of publication.
Since March, the price of gold has increased as investors have grown more concerned about the banks’ financial stability and the probable need for government bailouts. Due to these worries, demand for safe-haven assets like gold has increased. Gold is seen as a hedge against inflation and currency devaluation. On Tuesday, the metal’s price was $2,021 per ounce, which is only 3% below its all-time peak in August 2020.
Due to its programmed supply limit, Bitcoin (BTC), often known as “digital gold,” has increased from $20,000 to as high as $29,000 in parallel with the rise in gold. Kaiko, a digital asset market analysis organization, disclosed on Monday that BTC’s correlation with gold reached a multi-year high and surpassed equities last week.