If you’ve been reading our more macro newsletters alongside what you read on The Block, you’ve probably noticed that geopolitical tensions have continued to push the price of gold to recent record highs.
Given the recent success of safe assets, this is expected to lead to more action in the gold stablecoin market.
However, the gold stablecoin market has historically been very bleak. The two major players are Tether, which uses Despite the recent rise in gold, XAUT’s market cap is $580 million, while PAXG’s is much lower at less than $450 million.
While the supply of
If we look at the trading volume on centralized exchanges for these gold stablecoins, we have seen a slight uptick, but this can be partially attributed to the rise in the value of gold.
The 7-day moving average volume of both stablecoins hit relative highs in mid-March and began to fall again, even as gold prices continued to rise. The peak was much lower than the peaks reached earlier in stablecoin careers, such as during the local banking crisis of 2023.
Trading volume has been showing a gradual increase since hitting its lowest point in May. However, this weekend was pivotal for PAXG as its trading volume surged to $71 million on April 13, its highest level since May 2022. That’s because reports of Iranian drone attacks on Israel have raised fears of a wider conflict. XAUT volume also increased slightly, but not by the same amount.
That said, trading volume of $71 million is still quite low compared to cryptocurrency assets. Larger dollar-pegged stablecoins tend to handle billions of dollars of transaction volume per day on-chain alone. On CEX, the trading volume of dollar stablecoins is naturally much higher as many exchanges that do not support USD use these stablecoins as their primary quoting assets. It is also popular on exchanges that support USD to offer cryptocurrency-based trading options.
So, despite gold’s recent rise in popularity in the broader market, the gold-backed stablecoin market still appears to be quite niche.
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