Tokenized gold is gaining traction among crypto investors as digital asset markets struggle to find direction, with inflows into Paxos’ gold-backed token hitting a record in January.
Paxos Gold (PAXG), which is backed by physical bullion stored in LBMA-approved vaults in London, attracted more than $248 million in fresh capital during the month, according to DefiLlama data. The inflows pushed PAXG’s market capitalization above $2.2 billion, second only to Tether Gold (XAUT).
The surge in demand comes as gold continues a powerful rally. The precious metal climbed above $5,300 per ounce on Wednesday, rising 22% in January and gaining more than 90% over the past year. By contrast, bitcoin has fallen more than 10% over the same period, while the broader crypto market has also come under pressure.
That divergence has prompted some crypto investors to look toward blockchain-based gold as a defensive alternative amid an uncertain macroeconomic backdrop, said James Harris, CEO of crypto yield platform Tesseract Group.
“The growing traction of tokenized gold has significantly improved gold’s utility, particularly in terms of transferability and divisibility,” Harris said. “Meanwhile, bitcoin continues to trade more like a risk asset during periods of macro uncertainty.”
Tokens such as PAXG and XAUT provide fractional ownership of physical gold, enabling holders to transfer exposure on-chain and store it in crypto wallets. For investors, the structure offers access to a centuries-old store of value without the logistical burden of physical custody.
The total market capitalization of tokenized gold has now climbed above $5.5 billion, according to CoinGecko, reaching an all-time high as rising inflows and surging gold prices propel the sector to new levels.
