Gold-Backed Cryptocurrencies Soar While Bitcoin Struggles
Gold-backed ETFs, specifically PAXG and XAUT, experienced a significant surge of 23% in 2025, outperforming Bitcoin ETFs in terms of asset value.
Here's the lowdown on the hottest trends in the crypto world: Gold-backed tokens like Paxos Gold (PAXG) and Tether Gold (XAUT) are setting records, up 24.15% and 23.7% respectively year-to-date, leaving Bitcoin (BTC) in the dust.
While Bitcoin has taken a hit, losing over 11% of its value this year, gold-backed cryptocurrencies are shining bright. The broader crypto market has also taken a dip, falling by about 30%, according to the CoinDesk 20 (CD20) index.
Gold ETF Inflows Skyrocket
It's not just gold-backed cryptocurrencies that are seeing gains. Gold ETFs have also experienced a surge, attracting a whopping 226.5 tonnes in Q1 2025 - the highest level since early 2022, according to the World Gold Council. North America accounted for nearly 60% of this demand, illustrating strong regional preference for gold investment vehicles during uncertain times.
Gold-backed cryptocurrencies have also seen net token minting of over $42.7 million in the first quarter. This, combined with gold's price appreciation, has raised their total market cap to nearly $1.4 billion.
Gold Prices Break the $3,000 Barrier
Gold recently breached the $3,000 mark for the first time, a milestone that has experts predicting even greater upside potential. Jeffrey Gundlach, CEO of DoubleLine Capital, anticipates gold could climb as high as $4,000.
Gundlach's bullish prediction is based partly on changing strategies among global central banks. These institutions have been increasingly adding to their gold reserves, reversing a previous downward trend. According to IMF data presented by Gundlach, the total amount of gold held globally has risen from around 34 billion Special Drawing Rights (SDR) in 2010 to 40.9 billion SDR, bringing levels back to those last seen between 1975 and 1980.
The Allure of Tokenized Gold
Tokenized gold offers crypto investors exposure to real-world assets with blockchain-based liquidity. This unique blend of stability and flexibility makes it an appealing option for those looking to hedge against market volatility.
A New Era for Traditional Finance and Digital Assets
The stellar performance of gold-backed cryptocurrencies underscores the growing intersection between traditional finance and digital assets. As market uncertainties persist, these hybrid investments may continue to attract investors seeking stability without straying too far from the crypto arena.
Special Drawing Rights, which Gundlach referenced, are international reserve assets created by the IMF in 1969. They're defined through a basket of currencies and provide a standardized way to measure reserve holdings.
[1] Gold-backed cryptocurrencies outperform wider crypto market[2] Gold ETF inflows hit 3-year high in Q1 2025[3] Jeffrey Gundlach predicts gold could reach $4,000[4] Gundlach: Gold's rally far from over due to recession risks, central bank buying[5] IMF data shows central bank gold holdings on the rise
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Jeffrey Gundlach, CEO of DoubleLine Capital, predicts gold could reach $4,000 per ounce, driven by rising recession risks (which he places at 60% probability), monetary easing policies, and geopolitical instability. He emphasizes sustained central bank buying as a key factor supporting gold’s role as a store of value amid financial uncertainty. While gold recently fell to $2,975 due to tariff-induced market stress, Gundlach’s outlook remains focused on long-term macroeconomic pressures favoring gold’s upward trajectory.
[4] Gundlach: Gold's rally far from over due to recession risks, central bank buying[5] IMF data shows central bank gold holdings on the rise
- Despite Bitcoin's struggle, gold-backed cryptocurrencies like Paxos Gold and Tether Gold have flourished, exceeding 24% growth year-to-date.
- Gold ETFs have witnessed a substantial inflow in Q1 2025, attracting an unprecedented 226.5 tonnes, as per the World Gold Council.
- Recently, gold price surpassed $3,000 for the first time, with Jeffrey Gundlach of DoubleLine Capital predicting further upward movement up to $4,000.
- Gundlach's bullish gold prediction is based on economic factors such as rising recession risks, monetary easing policies, and geopolitical instability that support gold as a store of value amid market volatility.
- The rise in gold-backed cryptocurrencies, tokenized gold, and gold ETFs showcases the growing convergence between traditional finance and digital assets, providing an alluring investment option for those seeking stability in the crypto market.
