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Breaking News: Coinbase Confirms DOJ Investigation Following Major Security Incident

Gold-Backed Tokens Outperform Crypto Market. Further Upside Coming?

Best Owie
Best Owie
1 year ago
3 mins read
gold and crypto

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The crypto market has been on a recovery trend lately. Even with the market crash, it had already marked a year of massive returns for investors in the space. As is expected with a space with high volatility, crypto assets had begun to crumble in value. But despite the profitable year for cryptocurrencies, a subset of crypto tokens had made their mark as the assets with the highest returns, and they don’t look to be stopping anytime soon.

Gold-Backed Tokens Surge

These gold-backed assets have helped to increase the liquidity of gold by enabling the ownership of small fractions of gold. Physical gold is somewhat limited in its supply and tokens like this have provided an avenue for investors to get in on the millennium-old asset. These tokens follow the price of a commodity, gold in this case, in the same way, that stable coins follow the price of the fiat currency they are pegged to.

Related Reading | Crypto Market To Drop 80% Like Early Internet Company Stocks?, Why This Analyst Thinks So

Unlike gold ETFs, gold-backed crypto tokens allow investors to own a part of a physical gold bar, whereas investors are mainly betting on the price of gold with ETFs. Furthermore, investors are able to redeem their gold-backed tokens for physical gold whenever they want.

These characteristics have drawn more and more investors to these commodity-backed crypto tokens and as a result, the price of these digital assets has grown tremendously. So much so that these assets have been able to outperform the crypto market at large.

Gold-backed tokens soar

Gold-backed tokens outperform crypto market | Source: Arcane Research

Two of these gold-backed commodities have recorded the highest growth; Tether Gold (XAUT) and PAX Gold (PAXG). These two crypto assets have grown to a market cap of $409 million and $358 million respectively, marking a significant growth year for each asset.

Beating The Crypto Market

Even with the crypto market marking several bull runs in 2021, gold-backed tokens have managed to outperform the market. In 2021, the overall crypto market had grown a total of 150%. In contrast, the gold-backed token market surged as high as 360% in the same time period, returning more than twice that of the broader crypto market, with PAX Gold and Tether Gold leading the charge.

Crypto total market cap chart from TradingView.comCrypto total market cap at $1.95 trillion | Source: Crypto Total Market Cap on TradingView.com

Other commodities-backed crypto tokens have also begun to gain prominence in the market. Others have emerged that have been tied to silver, palladium, and even oil, but all of these have been met with obstacles that they have found hard to scale, stunting their growth.

Related Reading | Why Is Talent Leaving Silicon Valley For Crypto Companies? Recruiters Explain

Nevertheless, the gold-backed tokens have shown that commodities-backed tokens do have a future in the market. With growth expected to continue across the crypto market, these tokens may be on their way to being one of the most profitable subsets of crypto investments in the space.

Featured image from Finance Magnates, charts from Arcane Research and TradingView.com
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Best Owie
Best Owie

Best Owie

Best Owie is a seasoned managing editor with a wealth of experience currently serving as the Managing Editor at NewsBTC. Best is a highly skilled professional with a track record of producing engaging and informative content. With a keen eye for detail and a passion for accuracy, Best is committed to ensuring that each article published meets the highest standards of quality.

Read more

Best has over six years of experience in the crypto industry and has overseen the creation and publishing of thousands of articles over the years. Best is always abreast of everything that is going on in the crypto industry in order to create and curate the most relevant content for readers. This shines through in Best’s publications, which are always clear and concise, enabling easy reading and understanding for all.

Best is also an avid learner and advocate for new technology. This has seen Best dive into topics in areas such as decentralized finance (DeFi), non-fungible tokens (NFTs), Layer 2 blockchains, etc. In addition to this, Best is a vocal member of the crypto community across various social media platforms such as X and Reddit. Best’s work garners tens of thousands of readers monthly, who rely on the information in these publications to keep up-to-date with everything happening in the crypto community.

Best’s articles explore breaking news, intricate systems such as yield farming, liquidity pools, and other decentralized finance (DeFi) systems. This is because Best understands the importance of information to gaining financial freedom and believes that everyone should have access to this information.

Best also believes in leveraging the blockchain for philanthropy to create the most positive social impact. This involves work with charitable organizations focused on financial literacy and education. With each article, Best lends a voice to important issues such as a more financially inclusive future, transparent systems for growth and development, and technology that is not self-serving but one that serves all of humanity.

When not curating engaging content, Best can be found reading a book with a cup of hot chocolate, enjoying a Netflix series, or exploring the outdoors with Green - the world’s most quiet and well-behaved Husky. Best’s interests also span other industries such as art, finance, and security, attending seminars and conferences in not just the crypto industry but other industries as well.

As an animal lover, Best is also involved with charities for animals, local shelters, and rescues. Best is also involved in local events that promote inclusivity, such as being a prominent member of hiking clubs and a cycling club, as well as being a part of a very happy group of animal lovers.

Best is a true professional in every sense of the word, with an exceptional dedication to producing high-quality work. This shines through in Best's work on and off the clock. These include advocating for inclusive crypto education for all, the impact of financial illiteracy, and the benefits of adopting new technologies such as cryptocurrencies. Best’s prolific career in the media industry is a testament of how hard work and dedication pays.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

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