In a surprising twist, the gold-backed cryptocurrency sector has hit a three-year high in minting volume, even as central bank gold purchases wane. Over $80 million worth of gold-backed tokens were minted last month, buoying the sector’s market cap by 6% to a robust $1.43 billion, according to data from rwa.xyz. This surge reflects a broader shift in the gold market, where digital representations of the precious metal are gaining traction amid a slowdown in traditional central bank buying.
A New Era for Gold-Backed Tokens
The rise of gold-backed cryptocurrencies is more than just a fleeting trend—it represents an evolution in how investors approach gold. Monthly transfer volume for these tokens skyrocketed 77% to $1.27 billion, a clear sign of renewed interest. This uptick aligns with the World Gold Council’s report showing total gold demand reaching 1,206 tonnes in the first quarter of 2025, the highest first-quarter demand since 2016. Interestingly, this surge comes despite a decline in central bank purchases, which fell to 244 tonnes from 365 tonnes in the previous quarter.
Analysts suggest that this pivot to digital gold may be driven by a combination of factors, including the convenience of digital assets and the inflationary pressures that make gold a perennial safe haven. “Investors are increasingly looking for ways to hedge against economic instability, and digital gold tokens provide a seamless way to do so,” says Sarah Thompson, a crypto analyst at FinTech Insights. This trend mirrors broader tokenization efforts in the financial sector, such as Tether’s acquisition of a significant stake in Adecoagro, which underscores the growing ambition to integrate traditional assets into the digital realm.
The Role of ETFs and Market Dynamics
Gold ETFs have been pivotal in this shift, with investment demand doubling to 552 tonnes. This indicates a strategic move by investors to capitalize on gold’s safe-haven status, a strategy historically adopted by central banks. The influx of investment has pushed gold prices to an average quarterly high of $2,860 per ounce, representing a 38% year-over-year increase.
However, the market is not without its volatility. Last week, gold prices dipped by 2.35%, even as they continued a strong year-to-date rise of 23.5%. In contrast, risk assets, including cryptocurrencies, have also seen increases, suggesting a complex interplay between traditional and digital asset markets. Spot gold now trades at $3,240, underscoring the fluctuating nature of the market.
Yet, not all segments of the gold market are thriving. Traditional gold demand, particularly for jewelry, has slumped to pandemic-era lows, while bar and coin demand remains robust, especially in China. This divergence highlights the nuanced shifts within the market, where traditional forms of gold are losing ground to digital and investment-oriented avenues. The growing interest in tokenized assets is further exemplified by initiatives like the Tokenized Apollo Credit Fund’s DeFi debut, which showcases the innovative strategies emerging in the digital finance space.
Looking Forward: Digital Gold’s Path Ahead
As the landscape continues to evolve, the question remains: can gold-backed cryptocurrencies sustain their momentum? The current trend suggests a growing appetite for digital gold assets, but market conditions are always subject to change. Economic uncertainties, regulatory developments, and technological advancements could all play a role in shaping the future of this niche market.
What’s clear is that digital gold is gaining recognition as a legitimate investment avenue, attracting both institutional and retail investors. As Thompson puts it, “The fusion of blockchain technology with traditional gold assets opens up new possibilities for the market, offering both security and innovation.”
In the coming months, all eyes will be on how these dynamics unfold. Will central banks ramp up their gold purchases again, or will digital gold continue to gain ground? As we move further into 2025, the answers to these questions will shape not just the future of gold-backed cryptocurrencies, but potentially the broader financial landscape.
Source
This article is based on: Gold-Backed Crypto Minting Volume Hits 3-Year High as Central Bank Buying Drops
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
