Gold-backed tokens reached a major milestone this week, surpassing $1 billion in daily trading volume for the first time thanks to the yellow metal’s record rally.
Since the start of the shutdown on October 1, trading volume of tokenized gold products has surpassed $10 billion, surpassing BlackRock’s iShares Gold Trust (IAU), the world’s second-largest gold ETF, according to a new report from CEX.IO.
In that same window, the price of gold rose more than 10% in October, surpassing $4,300 per ounce, as the escalating trade dispute between the United States and China, the US government shutdown, and emerging signs of credit and liquidity stress in the financial system pushed investors toward the traditional safe-haven asset.
a blockchain-based crypto token backed by physical gold, accounted for 37% of all tokenized gold volume this month, up from 27% the previous quarter, according to data shared by CEX.IO. Its number of holders also increased by more than 12%, surpassing competitors such as Paxos Gold (PAXG), the report added.
Still, traditional ETFs still dominate the total market size: the $3.3 billion market capitalization of the tokenized gold sector is small compared to the $141 billion of the SPDR Gold Shares ETF (GLD) and the $62 billion in assets under management of IAU.
However, tokenized gold excels in trading speed. The volume-to-market cap ratio for tokenized gold is 34%, compared to 5.6% for GLD and 1.5% for IAU.
This speed suggests that investors are trading tokenized gold at a much higher rate than legacy gold instruments, and traders are turning to crypto tokens traded around the clock for active positioning and hedging against major risks, according to the report.
“[This] “It reflects how tokenized gold is used not only as a store of value but as an active utility asset within the crypto ecosystem,” research analyst Illya Otychenko wrote in the report. “Investors appear attracted to its accessibility and ability to respond quickly to macroeconomic shocks, including tariff uncertainty and geopolitical tensions.”
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