The cryptocurrency market has been struggling with corrective price action lately. Despite the market disaster, it’s already been a year of huge gains for crypto investors. However, despite a lucrative year, a bunch of gold-backed cryptocurrencies isn’t likely to stall anytime soon. Analyst Owie shares why further increases can be expected…
Gold-backed tokens are on the rise
By allowing tiny bits of gold to be owned, these gold-backed instruments contribute to increasing the liquidity of gold. With a shortage of physical gold, tokens like this have opened up a new avenue for investors to participate in the millennial precious metal. Just as stablecoins track the price of the fiat currency they are linked to, these tokens track the price of a commodity, in this case gold. Unlike gold ETFs, value metal-backed coins allow investors to own a portion of a real gold nugget, while ETFs primarily allow investors to bet on the price of gold. Additionally, investors can exchange gold-backed tokens for real gold at any time.
Tether Gold (XAUT) and PAX Gold (PAX) are the two most growing gold-backed commodities (PAXG). These two cryptocurrencies have a market capitalization of $409 million and $358 million respectively, indicating that each crypto has had a strong growth year.
How much did cryptocurrencies backed by gold make?
Although the crypto market had many bull runs in 2021, gold-backed tokens outperformed the market. The global crypto market has grown 150% by 2021. The gold-backed token market, on the other hand, surged as much as 360% in the same time frame, and with PAX more than doubled the entire crypto market.
Other cryptocurrencies backed by commodities are also getting stronger. Silver, palladium, and even others associated with oil developed, but all faced difficulties that hindered their development. However, commodity-backed cryptos have proven they have a future in the market. According to Owie, whose analysis we shared as Kriptokoin.com, these tokens can be expected to continue their development and may be on their way to becoming one of the most profitable crypto investment subgroups on the market.
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