Analysts have posted a report from which it follows that amid high inflation and ongoing geopolitical tensions, the popularity of gold-backed stablcoins is growing. The authors of the report argue that the largest gold-backed steiblocoin trades are PAX Gold (PAXG) with a market capitalization of $420 million and Tether Gold (XAUT) with a market capitalization of $200 million.
Kaiko experts specify that the trading volume on the PAX Gold (PAXG) stabelcoin market has almost doubled since September 2021. Stablecoin Tether Gold (XAUT) has shown less success.
Kaiko emphasizes that U.S. dollar-linked stablenecoins remain dominant in the market in terms of market capitalization and trading volume. The situation could change if gold-backed staplecoins were offered on more trading platforms, analysts believe. As this unique investment product seems more familiar to traditional investors.
Many investors perceive gold as a protection against inflation and as a safe haven amid geopolitical tensions. Experts believe that gold prices, which have risen by 4.67% since the beginning of February and reached a multi-month high, had a positive impact on trading volume of gold-backed stabelcoins.
The report’s authors note that overall, the stablcoin market has grown significantly since 2020. This is due to the growing use of staplecoins in the DeFi market as margin for derivatives and as currency for centralized spot markets. Today, nearly a quarter of all centrally-listed spot instruments are denominated in stabelcoins.
Amid the growth of the gold-backed stablercoin market, Kitco has decided to join Paxos and Tether in 2021. Last year, the Canadian precious metals retailer said it would issue a Kitco Gold (KGLD) stablcoin that would be fully backed by physical gold from Kitco DirectReserve vaults. In 2020, Australian startup Meld Gold said it plans to launch a blockchain-based platform for trading tokenized gold. In 2019, New York-based Paxos launched a gold-linked Pax Gold Stablecoin (PAXG).