Gold-backed cryptocurrencies are outpacing broader market trends as they benefit from a surge in gold exchange-traded funds (ETFs), which have seen their largest inflows in nearly three years. On the other hand, spot bitcoin ETFs experienced a significant setback, with nearly $1 billion being withdrawn in their largest-ever daily outflow.
Last week, physically-backed gold ETFs experienced their most substantial weekly inflows since March 2022, with 52.4 tons of gold (worth approximately $4.9 billion) added to these funds. According to data from the World Gold Council, North America was the primary source of this increased demand. Currently, total gold ETF holdings stand at 3,326 tons, valued at roughly $314 billion.
Gold prices have also been climbing, up nearly 11% in 2025, and showing a year-over-year increase of 43%. At present, gold is trading at around $2,910 per ounce, driven in part by growing geopolitical tensions and uncertainties surrounding potential tariffs under former President Trump’s administration.
This bullish trend in gold has also benefited gold-backed cryptocurrencies, such as Paxos Gold (PAXG) and Tether Gold (XAUT), which are designed to mirror gold prices. These tokens have outperformed the broader cryptocurrency market, which has risen by 26% year-over-year, as per the CoinDesk 20 Index.
The demand for gold-backed tokens is rising as well. According to RWA.xyz, over $25 million worth of commodity-backed tokens were minted in January, marking the largest monthly volume since December 2022. Meanwhile, around $12 million in tokens were burned during the same period.
Despite the growing demand for gold, the supply remains relatively stable. The World Gold Council reports a slight dip in mining production in the fourth quarter of 2024, with output dropping by two tons from the previous quarter. However, hedging and recycling efforts have increased, resulting in a 1% year-over-year rise in total tracked supply.
As gold continues to shine in the investment world, gold-backed cryptocurrencies are positioned to capitalize on the metal’s growing popularity.
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- Why Are Gold Coins Different Prices?
- How to Know Gold Purity?
