Gold-Backed Cryptocurrencies Are Attracting Attention

Gold-Backed Digital Assets Maintain Their Resilience

While many major cryptocurrencies, such as Bitcoin and Ethereum, are experiencing value declines, gold-backed digital assets, particularly Paxos’ PAX Gold (PAXG) and Tether’s XAU₮ tokens, are demonstrating a solid stance in the markets.

These gold-backed tokens have become a safe haven for crypto investors. They have provided over 50% gains since the beginning of the year, reflecting the historical rally of gold. However, despite this resilience, there are concerns that gold prices are gradually nearing a depletion point.

Major Declines in the Crypto Market

In a recent $19 billion liquidation event, Bitcoin lost 8.5% of its value in the last 24 hours. According to the CoinDesk 20 (CD20) index, the overall cryptocurrency market experienced a decline of 12.75%.

The PAX Gold token only declined by 0.23% to $3,998, while XAU₮ reached $4,010 with a 0.2% increase. These tokens are backed by physical gold reserves and provide crypto investors with protection against fluctuations, similar to gold's role in the traditional financial world.

Warnings on Gold Prices

Gold prices have risen over the last eight weeks, and according to the World Gold Council, this indicates that prices have entered an "overbought" territory. Analysis suggests that if gold prices remain above $4,023 per ounce, it means this stage is overbought. This situation increases the likelihood of a short-term pullback.

Uncertainties in the Broader Crypto Market

In the broader cryptocurrency market, the recovery process is expected to be a slow struggle. Liquidity constraints, the closure of exchange-traded funds over the weekend, and the cautious return of market makers indicate a weak foundation for an extended period. Additionally, the renewed trade tensions between the United States and China are increasing uncertainties in the markets.