Gold-Backed Cryptocurrencies Outperform Wider Market Amid Historic Rally
Gold-backed cryptocurrencies are outperforming the wider market, with PAX Gold (PAXG) and Tether Gold (XAUT) rising roughly 10% in line with the spot price of gold. Each of these tokens is backed by one troy ounce of gold stored in a vault.
Gold Miners’ Stocks Surge
In the traditional market, gold miners’ stocks have also surged. The VanEck Gold Miners ETF (GDX), an exchange-traded fund that tracks gold miners, has risen nearly 20% this year, outperforming the S&P 500.
Increased Demand for Gold
Gold’s price has risen this year due to tariff threats from both the U.S. and China, the Spring Festival holidays in the latter country, and a broader trend of growing demand. Last year, demand for the precious metal hit 4,945.9 tons, worth around $460 billion, according to the World Gold Council.
Transfer Volumes Surge
The price action has seen the supply of these tokens grow, with token mints outpacing burns by millions of dollars weekly. Transfer volumes for gold-backed cryptocurrencies, according to RWA.xyz data, have meanwhile surged more than 53.7% month over month.
Gold’s Rally and Bitcoin’s Dip
Meanwhile, most major cryptocurrencies have struggled so far this year. Bitcoin saw a modest 3.6% rise, leading the bitcoin-gold ratio to a 12-week low, while ether is down more than 17.6%. The CoinDesk 20 index is up just around 0.5%.
"Gold’s Rally and Bitcoin’s Dip Aren’t a Failure of the ‘Digital Gold’ Narrative"
"Gold’s rally and bitcoin’s dip aren’t a failure of the ‘digital gold’ narrative – they’re a setup," Mike Cahill, a core contributor to the Pyth Network, told CoinDesk in a written statement. "Right now, trade war fears and a strong dollar are fleeing a flight to traditional safe havens, but once liquidity returns and risk appetite rebounds, bitcoin could catch up in a big way."
"Smart Investors Know BTC is Still the Hardest Asset Next to Gold"
"Smart investors know BTC is still the hardest asset next to gold, and when Trump’s pro-crypto stance materializes into actual policy, bitcoin stands to benefit massively," he said.
Conclusion
In conclusion, the surge in gold-backed cryptocurrencies and gold miners’ stocks is a clear indication of the growing demand for the precious metal. The rally in gold is driven by a range of factors, including tariff threats, the Spring Festival holidays, and a broader trend of growing demand. As the market continues to evolve, it will be interesting to see how gold-backed cryptocurrencies and traditional gold miners’ stocks perform in the coming months.
FAQs
Q: What is driving the surge in gold-backed cryptocurrencies?
A: The surge is driven by a range of factors, including tariff threats, the Spring Festival holidays, and a broader trend of growing demand.
Q: How have gold miners’ stocks performed this year?
A: Gold miners’ stocks have surged, with the VanEck Gold Miners ETF (GDX) rising nearly 20% this year, outperforming the S&P 500.
Q: What is the current state of the cryptocurrency market?
A: The cryptocurrency market has struggled so far this year, with most major cryptocurrencies, including bitcoin and ether, experiencing significant declines.
Q: What is the outlook for gold-backed cryptocurrencies and traditional gold miners’ stocks?
A: The outlook is uncertain, but some experts believe that once liquidity returns and risk appetite rebounds, bitcoin could catch up in a big way.
