Crypto market data provider Kaiko claims that PAX Gold (PAXG) and Tether Gold (XAUT) trading growth is outpacing the overall growth of the crypto market.
The company’s analysts have posted a report, which shows that in the context of high inflation and ongoing geopolitical tensions, the popularity of gold-backed stablecoins is growing. The authors of the report claim that the largest gold-backed stablecoins in terms of trading volume were PAX Gold (PAXG) with a market cap of $420 million and Tether Gold (XAUT) with a market cap of $200 million.
Kaiko experts clarify that trading volume on the stablecoin PAX Gold (PAXG) market has almost doubled since September 2021. The stablecoin Tether Gold (XAUT) showed less significant gains.
Kaiko emphasizes that USD-pegged stablecoins remain dominant in the market in terms of market capitalization and trading volume. The situation could change if gold-backed stablecoins, analysts believe, were offered on a larger number of trading floors. Since this unique investment product seems more familiar to traditional investors.
Many investors see gold as a hedge against inflation and a safe haven in the face of geopolitical tensions. Experts believe that gold prices, which have risen by 4.67% since the beginning of February and reached a multi-month high, have largely positively affected the volume of trade in gold-backed stablecoins.
The authors of the report note that, in general, the stablecoin market has grown significantly since 2020. This is due to the growing use of stablecoins in the DeFi market as a margin for derivatives and as a currency for centralized spot markets. Today, almost a quarter of all spot instruments listed on centralized exchanges are denominated in stablecoins.
Amid the growth of the market for gold-backed stablecoins, Kitco decided to join Paxos and Tether in 2021. Last year, a Canadian precious metals retailer announced that it would be issuing a stablecoin, Kitco Gold (KGLD), which would be fully backed by physical gold from Kitco DirectReserve vaults. In 2020, Australian startup Meld Gold announced that it plans to launch a blockchain-based platform for trading tokenized gold. In 2019, New York-based Paxos launched the Pax Gold (PAXG) gold-pegged stablecoin.
Source: Bits
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