The price of gold has reached record highs due to geopolitical tensions, but the gold stablecoin market has not seen a significant increase in activity. The main players in this market are Tether’s XAUT and Paxos’ PAXG, with market caps of $580 million and just under $450 million respectively. However, compared to their dollar stablecoin counterparts, USDT and USDP, their presence is relatively small.
XAUT’s supply has remained steady at around 246,500 units since March 2022, while PAXG’s supply has decreased from its peak of around 340,000 units in August 2022 to 182,650 units currently. Although trading volumes for these gold stablecoins have shown some increase on centralized exchanges, this may be partly due to the rising value of gold.
While trading volumes for XAUT and PAXG reached relative peaks in mid-March, they have since declined despite the continued rise in gold prices. These peaks are also much lower compared to previous highs during the 2023 regional banking crisis. Although volumes have slowly risen since hitting a low in May, there was a slight uptick when PAXG experienced a significant jump in volume to $71 million on April 13, the highest level since May 2022, following reports of Iranian drone attacks on Israel.
However, $71 million in trading volume is still relatively low for a cryptocurrency. In contrast, larger dollar-pegged stablecoins often transact billions of dollars a day on-chain alone. On centralized exchanges, the volumes for dollar stablecoins are even higher, given their widespread use as a primary quote asset.
In conclusion, the gold-backed stablecoin market remains a niche subsector, even with the recent surge in gold’s popularity in the broader market. It is important to note that this article is for informational purposes only and should not be considered financial advice.
