Gold-Backed Crypto Soars as Central Banks Pause: A New Era of Digital Safe Havens?

The investment landscape is shifting. While central bank gold purchases dipped in early 2025, tokenized gold-backed cryptocurrencies hit a three-year trading volume high, driven by geopolitical tensions and the rise of real-world assets (RWA). This divergence raises critical questions: Is the crypto sector now the primary beneficiary of gold’s safe-haven appeal? And what does this mean for investors?

The Crypto Gold Surge

Gold-backed crypto trading volumes surged in early 2025, reaching a three-year high. By April 2025, weekly tokenized gold trading volumes exceeded $1 billion, matching the peak seen during the 2023 U.S. banking crisis. Key metrics include:
- Paxos Gold (PAXG) trading volume rose over 900% since January 20, 2025.
- Tether Gold (XAUT) saw a 300% increase, while Kinesis Gold (KAU) skyrocketed 83,000%—though from a low baseline.
- PAXG inflows hit $63 million between January and April 2025, and XAUT outperformed broader crypto markets, dropping just 0.08% during a 7% crypto selloff in April.

This surge coincided with U.S. President Trump’s inauguration, which amplified geopolitical tensions and tariff uncertainty. Tokenized gold’s $2 billion market cap by mid-2025—up 21% since January—demonstrated its appeal as a low-volatility, blockchain-integrated asset.

Central Banks: A Pause, Not a Retreat

Central bank gold purchases fell 21% in Q1 2025 compared to Q1 2024, dropping to 244 tonnes. However, this decline is not cause for alarm. Key context:
1. Underreported Demand: Only 22% of central bank purchases were officially reported. China, for instance, added 13 tonnes but is suspected of holding over 5,000 tonnes (double its reported reserves).
2. Strategic Buyers: Poland (adding 49 tonnes to reach 21% of reserves) and Kazakhstan (net +6 tonnes) continued aggressive accumulation, while Russia and Uzbekistan made smaller sales.
3. Long-Term Trend: Central banks bought 1,044.6 tonnes in 2024, the third-highest annual total on record, marking the 15th straight year of net purchases.

The World Gold Council noted Q1 purchases remained 25% above the five-year average, suggesting the slowdown was cyclical, not structural. Geopolitical risks—such as de-dollarization and trade wars—continue to fuel demand.

Why the Shift to Crypto Gold?

Three factors explain the divergence:
1. Geopolitical Uncertainty: Investors, including institutions, are fleeing volatile fiat currencies and traditional equities for assets like tokenized gold, which offers blockchain liquidity and 1:1 physical backing.
2. RWA Adoption: The Real-World Assets trend is accelerating, with platforms like HTX enabling seamless trading of XAUT. This appeals to crypto-native investors seeking diversification without leaving the ecosystem.
3. Performance Edge: Tokenized gold outperformed Bitcoin (-19%) and the broader crypto market (-26%) in early 2025, while physical gold hit a record $3,170/oz.

Risks and Considerations

• Regulatory Overhang: Governments may tighten rules around tokenized assets, impacting liquidity.
• Volatility Ceiling: While less volatile than crypto, tokenized gold is still tied to market sentiment, as seen in its 0.08% drop during April’s crypto selloff.
• Central Bank Underreporting: If unreported purchases materialize, they could cap gold’s price upside.

Conclusion: A Dual-Track Future

The data paints a clear picture: tokenized gold is emerging as a critical safe-haven asset, attracting retail and institutional investors alike. Even as central banks slow purchases, their 25%+ above-average buying and 15-year accumulation streak confirm gold’s enduring role in reserves.

For investors, the split offers two opportunities:
1. Crypto Gold: Go long on PAXG or XAUT for exposure to RWA growth and liquidity. These tokens surged 900% and 300% in early 2025, outpacing traditional gold ETFs.
2. Physical Gold: Hold bullion or ETFs (e.g., GLD) for stability, but note that tokenized alternatives now provide superior accessibility.

The $2 billion market cap and $1 billion weekly trading volumes of tokenized gold in 2025 signal a structural shift. While central banks may pause, the crypto sector is here to stay—redefining how the world accesses the ultimate safe haven.

In this new era, investors ignore tokenized gold at their peril. The numbers speak: when uncertainty rises, so does demand for assets that blend blockchain’s innovation with gold’s timeless value.