Gold Prices Decline While CZ Announces Gold Token

Recently, the gold price has pulled back from record levels to stabilize around 4,100 dollars. However, this situation has not affected the popularity of gold-backed tokens. Changpeng Zhao (CZ), the founder of Binance, pointed out that gold tokens are not “real gold.” Currently, the tokens pegged to the gold price continue to attract investor interest, and according to CoinGecko data, the total market value of these tokens has reached 3.86 billion dollars.

Particularly noteworthy are tokens like Tether Gold (XAUT) and Paxos Gold (PAXG), while some experts approach this trend with caution. CZ stated that it is incorrect to define gold tokens as “gold on the chain.” Zhao emphasized that “Tokenizing gold does not mean owning gold on the chain,” indicating that this situation poses risks for investors. Relying on a third party to provide physical gold to investors in the future is considered a risky approach due to the uncertainties it carries.

The roots of this criticism extend to discussions about stablecoins. According to a recent report by NYDIG, dollar-pegged tokens like USDC and Tether (USDT) can still lose value during extreme market fluctuations. During the recent 500 billion dollar market crash, Ethena's USDe token fell to 0.65 dollars on Binance. CZ summarized this situation with a striking statement, saying, “This is a ‘trust me, bro’ token. That’s why no gold coin has really held up.”

As of today, Tether Gold has a market value of 2.1 billion dollars, whereas the market value of USDT is around 183 billion dollars. This clearly demonstrates that investors still prefer “dollars, not gold.” In this context, it is of great importance for investors to assess the risks associated with gold tokens and closely monitor the current market conditions.