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 Arcane Research’s latest weekly report. For details cryptocoin.com keep reading.
Gold-based altcoin projects shine, BTC disappoints
In 2022, investors are rushing to the perceived safety of altcoin projects in gold, 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.
Gold itself rallied almost 14% on YTD to about $2,070, its highest level since August 2020. Arcane records:
Gold-based altcoin projects seem to have attracted more crypto investors as the rising gold price allows crypto investors to diversify their inflation bets.
PAXG outperforms XAUT
PAX Gold contributed the most (around $500 million), bringing the market value of gold tokens to over $1 billion. While citing the chart below, Arcane states that its biggest competitor, Tether Gold, has witnessed minimal growth.
Currently, PAX Gold’s total market cap 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 money behind the gold-based altcoin rally
Alexander Tkachenko, founder and CEO of Luxembourg-based, FMA-regulated tokenized gold investment platform VNX, explains that smart investors are more cautious when investing in cryptocurrencies.
He added that their decision to invest in gold-backed tokens demonstrates trends in adopting 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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