Market Cap of Gold-Backed Tokens Crosses USD 1B as Ukraine War Makes the Metal Shine
The interest in gold-backed stablecoins is on the rise, with inflows accelerating after the aggression on Ukraine started. Following the surge in adoption, the combined market capitalization of the two dominant tokens – pax gold (PAXG) and tether gold (XAUT) – for the first time crossed the USD 1bn mark last week.
The interest in stablecoins backed by gold has come as the yellow metal has again gotten more attention as a safe haven asset. Notably, the renewed interest has been helped by the Ukraine war, which has already led to a price surge across the commodities sector, which in turn has fuelled fears that the already high inflation will rise further.
As a result of the demand for the yellow metal, its spot has risen by about 5% year-to-date, from just under USD 1,830 at the beginning of the year to USD 1,920 as of Wednesday at 13:00 UTC.
Price of PAXG (equals 1oz of gold) since inception:
Despite the strong recent inflows into gold, however, the current price is still down markedly from a high of USD 2,070 from last week – a price that was within a short distance of gold’s USD 2,075 all-time high from August 2020.
Commenting on how the moves in the gold market have affected demand for gold-backed digital tokens, crypto researcher Coin Metrics wrote in a report this week that adoption of Paxos’ gold token, PAXG, has been on the rise.
“As market activity in gold has increased in recent weeks, PAXG adoption on Ethereum has been rising,” Coin Metrics said.
PAX Gold market capitalization:
With the growth seen in the market capitalization of the PAXG token, Coin Metrics showed – not surprisingly – that the token has been the stablecoin with the strongest supply growth year-to-date (YTD).
Notably, trading activity in the PAXG token
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