As Markets Get Shaky, Investors Hunt for Safer Ground and Gold-Backed Cryptos Are Once Again Proving to Be a Favorite

As markets get shaky and investors hunt for safer ground, gold is once again proving to be a favorite. But this time, it's not just the traditional yellow metal that's winning attention, its digital versions are catching fire too.

As markets experienced turbulence and investors sought safer territory, gold predictably came into the spotlight. Yet, this time, it wasn’t just the traditional yellow metal that was grabbing attention; its digital versions were heating up as well.

In a year marked by macroeconomic shifts and geopolitical unrest, gold-backed cryptocurrencies like Paxos Gold (PAXG) and Tether Gold (XAUT) displayed strong performance, with both tokens rising by over 23% year-to-date. These digital tokens are directly pegged to physical gold and move in tandem with its price movements.

Both tokens touched new all-time highs of over $3,300 in early 2025 before settling slightly lower. In contrast, Bitcoin experienced a year-to-date decline of over 11%, and the overall crypto market saw a decrease of more than 30% according to the CoinDesk 20 index. As a result, many investors are turning to tokenized gold to serve as a hedge against inflation and market volatility.

While Trump's tariff war had a significant impact, crashing the entire crypto market, Gold ETFs remained strong, highlighting the enduring value of this investment class.

The two top-performing tokens, PAXG and XAUT, have become increasingly popular among investors as they combine the best of both worlds: real-world asset backing and the flexibility of crypto. These tokens are backed by actual gold, which is stored in high-security vaults, but they can be traded easily and rapidly on the blockchain.

This property renders them more liquid than traditional gold while still offering the same safe-haven qualities. With growing uncertainty in global markets, especially due to rising tensions between the U.S. and China, more investors are seeking stability, and gold is a natural and logical choice.

The rising interest in gold isn't limited to the crypto space. Traditional investors are pouring money into gold ETFs as well. In the first quarter of 2025, inflows into gold ETFs reached 226.5 tonnes, the highest level in three years, according to the World Gold Council. North America led the trend, accounting for nearly 60% of that demand. This shows a broader shift toward gold as a safer investment option.

Meanwhile, backing the rally in tokenized gold is a wave of new token minting. In Q1 alone, over $42.7 million worth of PAXG and XAUT were minted, according to RWA.xyz. This helped raise the total market cap of gold-backed tokens to nearly $1.4 billion.

As both traditional and crypto markets face pressure, it's clear that tokenized gold is becoming a go-to asset for investors who want security with digital convenience.