Gold-backed digital assets outperform Bitcoin, Ethereum

According to a Reuters, the crypto market is going through red circles. Gold-backed stablecoins such as Pax Gold , and Tether Gold  are outperforming the odds and returning positive returns for investors.

Gold-backed coins are on the rise in 2022

According to the report, assets have performed well despite the losses in the overall crypto market. PAXG has risen 7.4% by 2022, while its nearest competitor, XAUT has increased 8.5% in the same period.

Stablecoins mentioned are pegged at gold, while regular stablecoins can be pegged to the U.S. dollars.

Everett Millman, Gainesville Coins’ chief analyst for market analysis, stated that many people are concerned about the fact that digital assets aren’t backed by anything. It makes sense to “attach them or link to a real-world commodities.”

It is often referred to as the digital gold. Therefore, the decision to have assets pegged against gold demonstrates the importance of the precious metal for the global financial system.

The demand for gold-backed coins in rising

These stablecoins are still in demand, even though they are gold-backed.

CryptoSlateshows the market capital of the largest asset in the space, PAXG. In the last 24 hours, PAXG had a trading volume approximately $34 million. Tether, the largest stablecoin pegged directly to the dollar, has a trading volume around $66 billion.

Despite the disparity in numbers, a quick look at the data will show that the market is growing steadily as PAXG’s value has more than doubled while that of XAUT has risen more than 9%.

The CTO of Tether, Paolo Ardoino spoke out about the increasing demand.

Many of our crypto investors were already invested, but were interested in a more inflation-resistant asset like gold.

But doubts persist

The crypto space is still skeptical about the new class of crypto assets. They claim that the asset’s price performance is not comparable to gold.

Galaxy Digital’sheadof research Alex Thorn describes them like:

“Literally, just IOUs that are using blockchain infrastructure. 

Aside from this, some industry players see these assets as a disadvantage because they are still trying to gain market share and have very little liquidity.

This is true, but these coins offer investors who are interested in gold a lower entry cost and easier ownership.

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