Surge in Gold-Backed Cryptocurrencies as Metal Reaches All-Time High Amid Trade Concerns

The precious metal has rallied nearly 10% so far this year while most top cryptocurrencies struggled to stay in the green.

What to know:

• Gold-backed cryptocurrencies are outperforming the wider market amid a surge in the precious metal’s price.
• The rise saw activity surrounding these tokens surge significantly, though their adoption is still far behind that of stablecoins.

Gold-backed cryptocurrencies are proving to be a strong investment, boosted by a historic rally in the price of gold, which is up around 9.7% this year to a new record of $2,880 per ounce, amidst concerns about a trade war. Both PAX gold (PAXG) and Tether gold (XAUT) have risen roughly 10%, paralleling the spike in gold prices. Each of these tokens is supported by one troy ounce of gold stored in a secure vault.

In the traditional markets, gold miners’ stocks have also surged, with the VanEck Gold Miners ETF (GDX) rising nearly 20% this year, outperforming the S&P 500. The demand for gold has significantly increased over tariff threats from both the U.S. and China, as well as a broader trend of rising demand. The World Gold Council noted that last year’s demand for this precious metal reached 4,945.9 tons, valued at about $460 billion.

In contrast, many major cryptocurrencies have faced challenges this year. Bitcoin has only seen a modest 3.6% increase while Ether’s value has decreased by more than 17.6%. According to Mike Cahill, core contributor to the Pyth Network, gold’s price surge and Bitcoin’s decline do not signal a weakness in Bitcoin’s reputation as ‘digital gold’ but rather a short-term divergence influenced by current market conditions. “Smart investors understand BTC remains one of the hardest assets next to gold, and as pro-crypto policies unfold, Bitcoin could greatly benefit.”

For further insights, more information on the gold-backed crypto market can be explored.