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.
Gold shines, Bitcoin disappoints
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:
“The rallying gold price seems to have attracted more crypto investors to the gold-backed tokens […] since they allow crypto investors to diversify inflation bets through familiar crypto market infrastructure.”…read more.