Gold is in demand and the range of tokenized gold is extensive. This is a direct response to investors looking for safety. At the same time, Bitcoin is struggling to keep pace.
Will capital opt for gold for the time being, or will it turn away from crypto completely?
The flight to safety is not limited to TradFi
The supply of tokenized gold has increased alongside the rise in the gold price, according to recent data from Token Terminal.
Paxos-issued PAXG now has outstanding supply of about $1.5 billion, up from levels seen through most of 2023 and early 2024.
Source: Token terminal
Investors are not only purchasing gold holdings through ETFs or physical bars, but also through blockchain-based versions.
This may be because tokenized gold offers easier access, faster settlement, and 24-hour trading. These features become very attractive in times of uncertainty.
Gold vs BTC: Lagging Price or Valuation Gap
As gold soars, Bitcoin soars [BTC] the army follows behind. Is Bitcoin underperforming because capital is leaving crypto, or because investors are temporarily preferring safer assets?
The Bitcoin-to-gold ratio has fallen to levels that have thus far been associated with market lows. In previous cycles, declines in this ratio occurred as Bitcoin later rebounded strongly. This happened even as demand for gold cooled.
This means that Bitcoin’s weakness could be relative rather than absolute. Crypto analyst Michael Van de Poppe noted that the current setup is similar to previous market bottoms.
“One of them is overvalued. One of them is undervalued. In my thesis, gold is overvalued, while Bitcoin is undervalued.”
Source:
Meanwhile, Bitcoin maxi Matthew Kratter has focused on the long-term plan rather than the short-term gold boom.
“Gold supplies have been increasing 1 to 2% annually for decades, if not centuries. It is very expensive to ship and guarantee large amounts of gold, so it is a very poor way to solve trade imbalances.”
A known match, unresolved
For now, gold appears to be winning the security trade with strong prices and selective risk appetite. But Bitcoin proponents argue that the same store-of-value talk is still happening…just on different timelines.
But will this be a long-term change and not a phase? That depends on how investors define security in a digital financial system.
Final thoughts
- Tokenized gold supply reaches $1.5 billion; can be seen as a flight to safety.
- Bitcoin’s gold lag to date could be a valuation gap linked to BTC’s subsequent recovery.