The total market capitalisation for gold-backed crypto tokens has eclipsed $1 billion. After rising 2.4% over a 24-hour period, trading volumes for tokenised gold zoomed passed $35 million, per data from Coingecko.

In brief

  • The market cap for tokenised gold has surpassed $1 billion.
  • Tether Gold and Pax Gold are at parity in a two-horse race.
  • Bitcoin and Litecoin are seen as digital versions of gold and silver in crypto markets.
  • Concerns over a global banking crisis are pushing gold prices higher.

The top two assets are neck and neck, each vying for supremacy. The market capitalisation for PAX Gold currently stands at $522 million, while that of Tether Gold (XAUt) is $499 million. According to Coingecko data, the next competitor is Perth Mint Gold Token, which is a minor player at a market capitalisation of $2.46 million, rendering the current tokenised gold-market a two horse race.

The two front runner gold tokens have seen prices soar over $2,000 – in line with the paper-traded price of the underlying asset. PAX Gold is up 2.6%, while XAUt is up 2.2%, registering a slight discount.

The market-cap milestone for tokenised gold crypto assets comes as gold prices jumped to a 13-month high at $2,025.

What is tokenised gold?

As the name implies, Tether Gold and Pax Gold tokens are pegged to the price of gold. Since they use the same technology as Ethereum, they offer investors the ability to easily purchase gold IOUs and trade on centralised exchanges.

Contrary to the decentralisation ethos, these gold tokens function in a custodial fashion and are similar to traditional financial products.

PAX Gold is issued by New York-based fintech firm Paxos Trust Company. Tether Gold, is issued by Tether — the company which also issues the dominant USD-pegged stablecoin, USDT (currently holding an $80 billion market capitalisation).

Kraken and embattled exchange Binance are the primary markets for PAX Gold among major centralised exchanges, while Bitfinex dominates the Tether Gold market.

Uniswap also offers trading for the tokens, but with significantly less liquidity.

Safe haven assets amidst a banking crisis

Proponents for ‘safe haven assets’ come from all walks of life, and often tout a mixture of assets which, when considered together, provide a ‘sound money’ basket that counterbalances current traditional banking woes and persistent inflationary pressures in global economies.

Such assets include Gold, Bitcoin, Litecoin and Silver, among others; all of which exhibit sound money properties such as scarcity, fungibility and long-term integrity.

While the ‘big-even’ $1 billion number appears significant, tokenised gold markets have previously hit this milestone, spending much of 2022 well above this level.

TradingView Chart

Gold has been trading between $2,000 and roughly $1,600 since first testing the upper bound in August 2020. The asset has since tested the $2,000 level three times – including the current attempt. Analysts, including hedge fund legend Stanley Druckenmiller, expect new highs for gold in the near future as a consequence of inadequate central bank policy.

Concerns over an unravelling banking crisis have seen investors flock to safe-haven assets, so much so that gold and bitcoin have noticeably correlated in recent weeks.

Bitcoin and Litecoin are often considered to be the gold and silver-standards of the cryptocurrency market, if not directly comparable “digital gold” and “digital silver”.

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