While the stock and cryptocurrency markets were fluctuating in the previous week, the gold price increased by 3.85%. On February 10, the price of pure gold rose from $1,826.92 to $1,897.36 an ounce. Also, 4 of today’s leading gold-based cryptocurrencies have witnessed a massive increase in demand alongside premiums above the current market price of gold.
Gold price shines during economic uncertainty
As we quoted as Kriptokoin.com, global economic instability is based on the conflict and threat of war between Russia and Ukraine. This caused stock markets to drop this week, and on Friday’s closing bell, all three major indices were in negative territory. At the end of Friday, the Nasdaq fell -168, the Dow Jones -232 and the NYSE -99. Moreover, the cryptocurrency market did the same as billions of dollars left the crypto economy, dropping from under $2 trillion to $1.88 trillion last week.
Tokenized gold market value rises
As the price of precious metals soars, demand for tokenized gold cryptocurrencies has skyrocketed. The market cap of Tether gold (XAUT), Pax Gold (PAXG), Perth Mint Gold Token (PMGT) and Digix Gold (DGX) rose between 2.4% and 8% in the previous week. Meanwhile, they oscillate between the spot market price of gold and a reasonable premium. For example, Pax Gold (PAXG) is currently trading at $1,925.71, which is 1.039 percent higher than the spot gold price. In PMGT, it is worth more than an ounce of real gold in the current market.
XAUT and PAXG saw massive growth in 25 days and have been on the rise ever since. XAUT’s market cap reached $410 million on January 25, with a gain of approximately $20 million. PAXG’s market capitalization was $332.7 million, with $92 million added in the last 25 days. In the last two years, XAUT’s market capitalization has increased by approximately 20,000%, while PAXG has increased by 16,000%.
New investors favor tokenized gold products
Those involved in the crypto economy have discovered gold-backed cryptocurrencies similar to stablecoins, and this trend seems to be a business cornerstone. Like their physical counterparts, digital gold tokens can be used to hedge against market downturns. With the current premiums, arbitrage opportunities are possible, just like in the fiat-pegged cryptocurrency markets.
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