The first quarter of the year highlighted a significant shift in investor interest towards gold, particularly focusing on not just physical gold but also its digital representations on the Blockchain. Gold-backed altcoins such as Paxos Gold (PAXG) and Tether Gold (XAUT) have gained over 23% in value since the beginning of the year, outperforming the overall cryptocurrency market. Meanwhile, Bitcoin (BTC) $84,922 experienced an 11% decline, and the broader cryptocurrency market saw a decrease of over 30% during the same period.
Strong Interest in Gold-Backed Altcoins
The allure of gold-backed altcoins like PAXG and XAUT stems from their physical backing and the ease of trading on digital platforms. These coins maintain a value that closely mirrors physical gold while providing investors with the freedom to trade 24/7, independent of traditional market hours. The rising political and economic tensions between the U.S. and China have prompted investors to seek safer assets, placing gold-backed altcoins in the spotlight.
By merging the safe-haven characteristic of traditional gold with the accessibility of the digital world, these altcoins are increasingly finding a place in the portfolios of individuals and institutional investors alike. Earlier in the year, both coins surpassed the $3,300 mark, reaching new record highs. This performance underscores a continued trust in gold despite significant price declines in the cryptocurrency market.
Rising Demand for ETFs and Coin Minting
This trend in the cryptocurrency realm has resonated within traditional investment circles as well. According to data from the World Gold Council, gold ETFs saw an influx of 226.5 tons in the first quarter of 2025, marking the highest quarterly increase in three years. More than 60% of this demand originated from investors in North America, indicating that both individual and large institutional capital are gravitating towards gold as a safe haven.
Gold-Backed Altcoins and Gold ETFs Moreover, the demand for gold-backed altcoins is not merely linked to price increases. In the first quarter, new minting of PAXG and XAUT coins valued at $42.7 million was introduced to the market, contributing to a total market value of approximately $1.4 billion. The uncertainty seen in both traditional and cryptocurrency markets has led investors to increasingly prefer tokenized gold.
