Gold-backed cryptocurrencies have outperformed the wider cryptocurrency market in recent weeks, driven by a historic rally in the price of gold. This surge comes amidst growing trade war tensions, pushing the price of gold to a new record of $2,880 per ounce.
PAX gold (PAXG) and Tether gold (XAUT), both backed by one troy ounce of gold stored in a vault, have risen roughly 10% in line with the spot price of gold. This price action has seen the supply of these tokens grow, with token mints outpacing burns by millions of dollars weekly. Transfer volumes for gold-backed cryptocurrencies have surged more than 53.7% month over month, according to RWA.xyz data.
Meanwhile, most major cryptocurrencies have struggled this year. Bitcoin saw a modest 3.6% rise, leading the bitcoin-gold ratio to a 12-week low, while ether is down more than 17.6%. The CoinDesk 20 index is up just around 0.5%.
Mike Cahill, core contributor to the Pyth Network, believes that the current situation is a setup for bitcoin. He argues that "trade war fears and a strong dollar are fleeing a flight to traditional safe havens, but once liquidity returns and risk appetite rebounds, bitcoin could catch up in a big way." He also emphasizes that "smart investors know BTC is still the hardest asset next to gold, and when Trump's pro-crypto stance materializes into actual policy, bitcoin stands to benefit massively."