Gold is in favor, and the supply of tokenized gold has expanded. This is a direct response to investors looking for safety. At the same time, Bitcoin is struggling to keep pace.
Is capital going for gold for now, or rotating away from crypto altogether?
The flight to safety is not confined to TradFi
The supply of tokenized gold has risen alongside gold’s price rally, per recent data from Token Terminal.
Paxos-issued PAXG now has an outstanding supply of about $1.5 billion, up from levels seen through most of 2023 and early 2024.
Investors aren’t just buying gold exposure through ETFs or physical bars, but through blockchain-based versions as well.
This could be because tokenized gold offers easier access, faster settlement, and round-the-clock trading. These features become very attractive during in times of uncertainty.
Gold vs. BTC: Lagging price or valuation gap
While gold flies up, Bitcoin [BTC] is army-crawling its way behind. Is Bitcoin underperforming because capital is leaving crypto, or because investors are temporarily favoring safer assets?
The Bitcoin-to-gold ratio has fallen to levels that have so far been associated with market lows. In previous cycles, drops in this ratio happened when Bitcoin later rebounded strongly. This is even as gold demand cooled.
This means, Bitcoin’s weakness may be relative rather than absolute. Crypto analyst Michael Van de Poppe noted that the current setup is similar to past market bottoms.
“One of them is getting overvalued. One of them is getting undervalued. In my thesis, Gold is getting overvalued, while Bitcoin is getting undervalued.”
Meanwhile, Bitcoin maxi Matthew Kratter has focused on the long-term plan rather than the short-term gold surge.
“Gold supplies have increased somewhere between 1-2% annually for decades, if not for centuries... It’s very expensive to ship and ensure large amounts of gold, so it is a very poor way of settling trade imbalances.”
A familiar contest, unresolved
For now, gold appears to be winning the safety trade with strong prices and selective risk appetite. But Bitcoin supporters argue the same store-of-value talk is still playing out... just on different timelines.
But will this be a long-term change than a phase? That depends on how investors define safety in a digital financial system.
Final Thoughts
- Tokenized gold supply hits $1.5B; can be seen as a flight to safety.
- Bitcoin lagging gold may be a valuation gap so far, linked to later BTC rebounds.
