Market cap of gold backed crypto tokens surpasses $1bn
Demand for gold is booming against a turbulent geopolitical backdrop with gold backed crypto tokens proving to be no exception.
Digital assets backed by gold have seen demand surge since the start of 2022 according to data from Arcane Research. The market cap of PAX Gold and Tether Gold, two of the largest crypto coins pegged to the price of gold, surpassed $1bn earlier this week, an increase of 60 per cent this year to date.
“Bitcoin has underperformed in this uncertain macroclimate, but many investors still view it as an inflation hedge,” commented Arcane Research in a blog post.
“Gold tokens can be helpful tools since they allow crypto investors to diversify inflation bets through familiar crypto market infrastructure,” the post added.
The price of gold has jumped by nearly ten per cent this year to trade above $2,000 per ounce, yesterday approaching the $2,070 mark. Meanwhile the market cap of PAX Gold, an asset backed by physical gold reserves, swelled by 50 per cent in February allowing the project to overtake Tether Gold’s position as the largest gold-backed token.
Investors are flocking to assets seen as a store of value amid Russia’s conflict with Ukraine which caused global stock markets to tumble.
Arcane Research noted that despite excessive growth, gold-backed tokens still account for a minimal share of the total crypto market, at just 0.05 per cent.
Read more: Gold surges again as Goldman predicts price will top $2500 this year