Crypto investors are flocking to tokenized gold as broader digital asset markets remain subdued, driving record inflows to Paxos’ gold-backed token in January.
Paxos Gold (PAXG), backed by physical bullion stored in LBMA-approved London vaults, saw more than $248 million in net inflows last month, according to DefiLlama data. The surge pushed PAXG’s market capitalization above $2.2 billion, second only to Tether Gold (XAUT).
The inflows coincide with a strong rally in gold prices. The precious metal topped $5,300 per ounce on Wednesday, climbing 22% in January and more than 90% over the past year. Meanwhile, bitcoin has dropped more than 10% over the same period, and the broader crypto market has also weakened.
The divergence has led some crypto investors to turn to blockchain-based gold as a defensive option amid macroeconomic uncertainty, said James Harris, CEO of crypto yield platform Tesseract Group.
“Tokenized gold has enhanced the metal’s utility, especially in terms of transferability and divisibility,” Harris said. “Bitcoin continues to trade more like a risk asset during periods of macro stress.”
Tokens such as PAXG and XAUT allow fractional ownership of physical gold, on-chain transfers, and crypto wallet storage, giving investors access to a traditional store of value without handling physical bullion.
The overall market for tokenized gold has now surpassed $5.5 billion, according to CoinGecko, reaching an all-time high as rising demand and gold prices propel the sector forward.
