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Banking Crisis Concerns Lead to Tokenised Gold Boom

GB Market Commentary 05/04/2023

by Marcus Sotiriou

The market cap of tokenised gold has risen above $1 billion, as trading volume and price have surged recently. The two largest tokenised gold assets, PAX Gold and Tether’s Gold, have market caps of $523 million and $499 million respectively at time of writing. New York based Paxos issues PAX Gold, whilst Tether issues Tether Gold.

These market-cap milestones for tokenised gold crypto assets coincide with the price of gold increasing to a 13-month high of $2,025, despite industrial metals falling.

PAX Gold and Tether Gold are tokens that are pegged to gold’s price, but are based on blockchain technology as they use Ethereum’s platform. This allows gold investors and traders to be able to self-custody their gold asset and trade them on centralised exchanges and secure cryptocurrency brokers with, potentially, more liquidity.

So far, Kraken and Binance have the most liquidity for PAX Gold and Bitfinex has the most liquidity for Tether Gold. Uniswap offers trading for both tokens, but with far less liquidity.

The recent boom can be put down to investors flocking to safe haven assets during the current fears of a banking crisis. Crypto investors could be hedging their exposure with gold, and prefer to self-custody their gold with secure cryptocurrency brokers as opposed to storing gold bars physically in safes. The ability for crypto to be used as digital bearer assets by using secure cryptocurrency brokers is a clear use case that can be adopted by the mainstream in the years to come.

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