Recent trends in the cryptocurrency market have been encouraging. The market crashed, but it was already a year with huge returns for the investors. Crypto assets began to lose value, as is normal in a volatile space. But despite the profitable year for cryptocurrencies, a subset of crypto tokens had made their mark as the assets with the highest returns, and they don’t look to be stopping anytime soon.
Gold-Backed Tokens Surge
This gold-backed asset allows the small ownership of fractions of gold, which helps to boost the market liquidity. Since physical gold has a limited supply, tokens such as this allow investors to take advantage of the long-established asset. The price of gold, as in these tokens, is tracked by the tokens in the same fashion that stable coins are tied to the fiat money.
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Gold-backed crypto tokens that are gold-backed allow investors to hold a portion of a physical bar of gold, which is not possible with gold ETFs. Investors cannot bet on the gold price by betting on ETFs. Investors can also redeem gold-backed tokens to purchase physical gold at any time.
These attributes have attracted investors more to the commodity-backed cryptocurrency tokens. As a result, their price has risen dramatically. They have outperformed the entire crypto market.
Crypto market outperforms gold-backed tokens | Source: Arcane Research
Tether Gold, (XAUT), and PAX Gold(PAXG) have experienced the greatest growth. The market caps of these two crypto assets are $409 million, and $358 millions respectively. This is a remarkable growth year for both asset types.
Crypto Markets: Beating the Market
The crypto market experienced several bull runs by 2021. However, tokens that are gold-backed have outperformed the market. Overall, the crypto market experienced a 150% increase in 2021. The gold-backed market for tokens rose to 360% during the same period. This is more than double the growth of the wider crypto market. Tether Gold and PAX Gold led the charge.
Source: Crypto Total Market Cap on TradingView.com| Source: Crypto Total Market Cap on TradingView.com
The market has also seen other crypto tokens that are commodities-backed rise in prominence. Other tokens that are tied to gold, silver and palladium have also emerged, though they all have faced obstacles which have made it difficult to scale up, limiting their growth.
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However, gold-backed tokens proved that commodities-backed tokens still have a place in the crypto market. These tokens could be one of the best subsets in crypto investment, with growth forecast to continue.
Featured Image from Finance Magnates. Charts from Arcane Research and TradingView.com.