Investors are turning to gold-backed tokens as the market cap of gold-backed altcoin projects surged 60% in 2022 to surpass $1 billion for the first time in history, according to the latest weekly report from Arcane Research. For details, continue reading Kriptokoin.com.
Gold-based altcoin projects shine, BTC disappoints
In 2022, investors rush to the perceived safety of gold altcoin projects whose value is pegged to the gold price. Arcane Research explains that precious metal-backed digital assets such as PAX Gold (PAXG), Tether Gold (XAUT) and more are gaining in value as investors “diversify their inflation bets” in the crypto sector. PAXG is also outperforming Bitcoin (BTC) this year as shown in the chart below.
BTC daily price chart against Gold / Source: TradingView Gold itself is up almost 14% on YTD to around $2,070, its highest level since August 2020 . Arcane notes:
Gold-backed altcoin projects seem to be attracting more crypto investors as the rising gold price allows crypto investors to diversify their inflation bets.
PAXG outperforms XAUT
PAX Gold contributed the most (approximately $500M), driving the market cap of gold tokens over $1B. While citing the chart below, Arcane states that its biggest competitor, Tether Gold, has witnessed minimal growth.
Market cap of gold-backed altcoin projects / Source: CoinGecko, Arcane Research Currently, the total market cap of PAX Gold is just over $607 million, up 85% in YTD . Similarly, Tether Gold’s market capitalization increased only 9.20% over the same period to approximately $211 million.
The smart coin behind the gold-based altcoin rally
Alexander Tkachenko, founder and CEO of Luxembourg-based, FMA-regulated tokenized gold investment platform VNX, said smart investors are more cautious when investing in cryptocurrencies. explains. He added that
decisions to invest in gold-backed tokens demonstrate trends to adopt regulated digital assets amid ongoing macro uncertainty. Alexander Tkachenko states:
Not all gold-backed tokens are good. Therefore, investors should be careful not to buy a ‘paper index’, but look for tokens linked to physical gold and ‘safe’, issued by regulated issuers, and that can represent gold reserves.
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