The recent spike of gold-backed token PAXG (Pax Gold) to $2.9k amid tensions in the Middle East has caught the attention of investors and analysts alike. Although the token has since fallen back to its previous price range, it begs the question whether it will continue its strong performance.

The weekend saw a significant crash in the crypto market, with Bitcoin falling below $63,000 and altcoins losing more than 10% of their value. Notably, however, PAXG rose to a record high, reaching a 20% premium to the gold price per ounce, despite broader market volatility.

Analysts suggest that geopolitical tensions in the Middle East have been the catalyst for PAXG’s remarkable performance. In times of uncertainty, retail investors often look for safer assets, and gold-backed tokens appear to meet this demand. The fact that other gold-backed assets, such as Tether Gold (XAUT), have not experienced the same price appreciation highlights PAXG’s unique position in the market.

Introduced by Paxos Standard in 2019, PAXG offers investors access to gold through blockchain technology. With a market capitalization of $432 million, PAXG is now the second largest tokenized gold coin, after Tether Gold (XAUT). Since early March, PAXG has seen a steady price increase, from $2,000 to $2,375, indicating growing demand for assets backed by safe havens.

Bob Elliot, former Bridgewater Executive, highlights the near-perfect negative correlation between BTC and PAXG, suggesting that Bitcoin may not be the most suitable asset for geopolitical hedging. This underlines the growing recognition of gold-backed digital assets as alternative safe havens in times of global turmoil.

While some theorists argue that rising tensions are good for Bitcoin due to its reputation as “digital gold,” gold-backed digital currencies appear to have a stronger claim to this title due to their relative stability. While the crypto market is often associated with volatility, gold-backed tokens like PAXG provide a reliable haven for investors looking for stability and value preservation.


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