Gold-backed cryptos are shining in 2022, market cap hits $1B for the first time
The market capitalization of gold-backed crypto tokens increased by 60% in 2022 to surpass $1 billion for the first time in history, according to Arcane Research in its latest weekly report.
In 2022, investors have been rushing to the perceived safety of gold-backed crypto assets, whose value is pegged to the price of gold.
Namely, PAX Gold (PAXG), Tether Gold (XAUT), and similar precious metal-backed digital assets have been climbing in value as investors "diversify inflation bets" within the crypto sector, explains Arcane Research. PAXG is also outperforming Bitcoin (BTC) this year, as shown in the chart below.
Gold itself rose by almost 14% YTD to nearly $2,050 an ounce, its highest level since August 2020. Arcane noted:
PAX Gold contributed the most — around $500 million — while swelling the gold tokens' market valuation to over $1 billion. In comparison, its top rival, Tether Gold witnessed minimal growth, Arcane noted while citing the chart below.
Currently, the total market cap of PAX Gold is a little over $607 million, up 85% YTD. Similarly, Tether Gold's market valuation rose to nearly $211 million, up just 9.20% in the same period.
Alexander Tkachenko, founder and CEO of VNX — a Luxembourg-based, FMA-regulated tokenized gold investment platform, explains that intelligent investors have been more cautious when investing in cryptocurrencies. He adds that their decision to invest in gold-backed tokens shows their inclination to adopt regulated digital assets amid the ongoing macro uncertainty.
Tkachenko said:
Related: Bitcoin stems losses after US bans Russian oil, gold heads to record highs
PAXG's issuer is Paxos, a New York State-chartered trust company regulated by the New York State Department of Financial Services
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