cryptonews.com
Despite the strong recent inflows into gold, however, the current price is still down markedly from a high of USD 2,070 from last week – a price that was within a short distance of gold’s USD 2,075 all-time high from August 2020.
Commenting on how the moves in the gold market have affected demand for gold-backed digital tokens, crypto researcher Coin Metrics wrote in a report this week that adoption of Paxos’ gold token, PAXG, has been on the rise.
“As market activity in gold has increased in recent weeks, PAXG adoption on Ethereum has been rising,” Coin Metrics said.
PAX Gold market capitalization:
With the growth seen in the market capitalization of the PAXG token, Coin Metrics showed – not surprisingly – that the token has been the stablecoin with the strongest supply growth year-to-date (YTD).
Notably, trading activity in the PAXG token on exchanges has also seen a strong uptick, reaching close to its highest level ever in March this year.
“Whether it is gold or US dollars, tokenized digital assets continue to proliferate across public blockchains,” Coin Metrics commented. It added that with the benefits of crypto, including “near-instant settlement, constant network uptime, shared infrastructure, and ease of creating crypto addresses,” the trend is likely to continue.
Meanwhile, gold-backed tokens were also addressed in an Arcane Research report from last week, where the firm said the space had seen “massive growth” in 2022.
“The rallying gold price seems to have attracted more crypto investors to the gold-backed tokens,” Arcane wrote, adding that the total market capitalization of gold-backed tokens has recently exceeded USD 1bn, a growth of 60% in 2022 alone.
“Bitcoin has underperformed in this uncertain microclimate, but many investors still view it as an inflation hedge. Gold tokens can be helpful tools since they allow crypto investors to diversify inflation bets through familiar crypto market infrastructure,” the firm commented.
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