2 gold-backed cryptocurrencies to consider investing in as demand surges
Gold’s recent record-breaking performance has caught the attention of investors and sparked a significant increase in demand. To capitalize on this trend, Finbold has identified two tokenized gold cryptocurrencies that offer exposure to this leading commodity.
The current TradingView index for gold stands at an all-time high of $2,431 per ounce, while gold contracts closed at $2,343 per ounce on April 12. Bloomberg Intelligence’s commodity expert believes gold could even reach $3,000 per ounce in the future.
However, investing in physical gold can sometimes be expensive and limiting in terms of geographic location and investment budgets. Consequently, some Chinese investors have turned to buying physical gold beans, as they offer a more accessible entry point and are easier to store and transport compared to traditional gold bars.
Similarly, access to gold derivatives like ETFs or diverse contracts can be hindered by entry barriers. As a result, the price of gold in different markets may deviate from underlying indexes such as TradingView’s.
To address this demand, certain cryptocurrency projects have introduced more accessible versions of synthetic gold tokens. These tokens provide a diverse exposure to gold, along with advantages like easier storage, portability, and arbitrage opportunities.
As per Finbold’s selection, the two most popular gold-backed cryptocurrencies or gold tokens are Tether Gold (XAUt) and PAX Gold (PAXG). Tether, a leading stablecoin issuer with a market cap of over $105 billion, offers XAUt as its gold token. Currently trading slightly above TradingView’s index at $2,345 per ounce, XAUt has a market cap of $577.75 million.
PAX Gold, on the other hand, is a gold-backed cryptocurrency issued by Paxos, a regulated blockchain infrastructure company. Despite having its own synthetic dollar (USDP) and serving as Binance’s dollar-stablecoin (BUSD) controller, Paxos’s gold token trades at a nearly 2% premium, priced at $2,385 with ongoing volatility. PAXG has a market cap of $435 million.
It’s worth noting that HSBC also offers its synthetic gold asset exclusively to its customers.
In conclusion, Tether’s XAUt and Paxos’s PAXG are considered the most solid tokenized gold cryptocurrencies for accessible investment and exposure to this precious metal through blockchain infrastructure in a permissionless manner. However, it’s important for investors to conduct thorough due diligence and understand the associated risks before making any financial decisions.
Disclaimer: The information provided above should not be considered as investment advice. Investing in cryptocurrencies involves risk, and investors should carefully evaluate their investment decisions.