It's been a dismal year for the crypto market. Bitcoin (CRYPTO: BTC) is down 25% for the year, while Ethereum (CRYPTO: ETH) is down 36% (as of Feb. 19). With these two market bellwethers struggling to find their footing, almost no major cryptocurrencies are in the green. But there is one sector of the crypto market that is booming right now: gold-backed stablecoins. The two leaders here are Tether Gold (CRYPTO: XAUT) and PAX Gold (CRYPTO: PAXG). Together, they account for 90% of the gold-backed stablecoin ...

Group 1 - South Korean investors are increasingly purchasing gold-pegged stablecoins to avoid high tax liabilities associated with physical gold trading [1][5] - Crypto trading in South Korea is currently not taxed, while physical gold incurs a 10% value-added tax and a 22% capital gains tax when traded on the Korea Exchange [1][2] - Gold-backed coins, such as Tether Gold and PAX Gold, are gaining popularity as they are pegged to the value of physical gold, with one token typically representing a troy ounce or a gram of gold [3][6] Group 2 - Global trends show investors shifting from higher-risk financial products to traditional safe havens like gold, influenced by recent tariff threats affecting crypto trading [4] - Analysts suggest that gold-backed coins provide a short-term investment advantage due to favorable tax regulations in South Korea [5] - Interest in gold-related cryptoassets is rising significantly, with Tether Gold trading accounting for over 0.6% of the 24-hour trading volume on Upbit, amounting to over $9 million [6]

Core Insights - Tether is experiencing a significant shift towards gold, as evidenced by a recent attestation report and the surge in gold prices, which recently surpassed $5,100 [1][2] - The supply of Tether Gold (XAUT) tokens has increased by 38% in the last three months, indicating a growing investor interest in gold as a hedge against economic uncertainty [1][2] - Tether's XAUT is now valued at $2.64 billion, a substantial increase from $677 million a year ago, making it the 50th largest cryptocurrency by market cap [3] Supply and Demand Dynamics - The supply of XAUT grew at five times the rate of Tether's primary product, USDT, in the fourth quarter, reflecting a strong demand for exposure to gold [2] - Tether sold approximately 173,400 XAUT in the fourth quarter, which is more than three times the amount sold in the previous six months, equating to $882 million in gold exposure [5] Competitive Landscape - Tether's XAUT faces competition from PAX Gold, which has a market cap of $2 billion, but Tether has established a leadership position in the tokenized gold market [4] - Tether is promoting XAUT as a means of payment, coining the term "Scudo" to represent a fraction of a troy ounce of gold [4] Regulatory Developments - Tether plans to launch USAT, a U.S.-regulated stablecoin designed to comply with the GENIUS Act, which mandates that stablecoins be backed by cash and U.S. Treasuries [6]

Group 1 - Economist Peter Schiff prefers a gold-backed cryptocurrency over Bitcoin during crises, particularly in contexts like Iran's currency crisis [2][4] - Schiff emphasizes that Bitcoin is not backed by any tangible asset, while he advocates for tokenized gold as a more reliable option [2][3] - The Iranian Rial's devaluation has led to increased interest in cryptocurrencies as a hedge, with Bitcoin being one of the options [4] Group 2 - Bitcoin's performance has been underwhelming, with a decline of 4.17% over the past year, while precious metals-backed cryptocurrencies like Tether Gold and PAX Gold have seen significant gains of over 70% [7][8] - Tether Gold is currently priced at $4,591, reflecting its strong performance compared to Bitcoin's price of $95,430.78 [8]

Core Insights - The article highlights the top ten cryptocurrencies by percentage increase in 2025 among tokens with a market capitalization exceeding $500 million, showcasing significant growth in the sector [1]. Summary by Category - **Top Performing Tokens**: - ZEC leads with an increase of 861% - WBT follows with a 131% increase - XMR shows a 123% increase - OKB has an increase of 118% - PAX Gold and Tether Gold increase by 67% and 66% respectively - Bitcoin Cash increases by 37% - Beldex shows a 24% increase - BNB and Dash have increases of 22% and 12% respectively [1].

Core Insights - Bitcoin is transitioning from a peer-to-peer currency to a store of value, as indicated by a significant decline in network activity and active addresses [2][3]. Group 1: Bitcoin Network Activity - There has been a 42.6% decline in Bitcoin's active addresses since 2021, suggesting a shift in usage patterns [2]. - Bitcoin's exchange supply ratio has decreased significantly since January 2023, indicating a reduction in liquid supply as investors prefer to hold rather than trade [2][3]. - The Mean Coin Age of Bitcoin has increased by 16% since January 2023, further reflecting a trend towards HODLing [4]. Group 2: Bitcoin's Performance - Bitcoin's performance in 2025 has not supported its image as a reliable store of value, with a 4.23% decline from the start of the year [6]. - In contrast, physical gold-backed cryptocurrencies have seen substantial growth, with increases over 70% this year, highlighting their role as effective wealth preservers [7].

Core Insights - Stablecoins, particularly U.S. dollar stablecoins like Tether and USDC, are primarily designed for digital payments rather than investment opportunities, with a market size of approximately $317 billion, where Tether and USDC account for about $263 billion [1] - Commodity-backed stablecoins, such as PAX Gold and Tether Gold, provide an alternative investment avenue, as they are backed by physical gold and have performed well amidst a declining crypto market [2] Group 1: Overview of PAX Gold and Tether Gold - PAX Gold and Tether Gold are both backed by one troy ounce of gold per token, issued by Paxos Trust Company and Tether Limited respectively, with each company managing gold storage and ownership rights for token holders [3] - Token holders have the option to redeem their tokens for physical gold, although this may reduce the convenience of investing in these stablecoins [4] Group 2: Pricing and Fees - Both stablecoins aim to track the spot price of gold, with Paxos charging fees based on order size for transactions, while Tether charges a one-time fee of 0.25% for purchases or redemptions [5] - As of December 27, gold was priced at $4,534 per ounce, with PAX Gold priced at $4,560 and Tether Gold at $4,543, indicating Tether Gold is slightly closer to the spot price [6][7] Group 3: Trust and Safety - The safety of these stablecoins is influenced by their issuers and the methods used to maintain their asset peg, with arguments suggesting Paxos may be viewed as more trustworthy due to its U.S. licensing and wider availability on U.S. crypto exchanges compared to Tether Gold [8]

Core Insights - Economic uncertainty continues to raise questions about the safety of investments, with cryptocurrency not performing as a reliable hedge against inflation and market volatility in 2025 [1][2]. Group 1: Cryptocurrency Performance - In 2025, the S&P 500 increased by approximately 16%, while Bitcoin only rose around 6%, indicating that even major cryptocurrencies can lag behind traditional stock markets for extended periods [2]. - Cryptocurrency is increasingly viewed as a high-risk asset rather than a safe haven, particularly during economic instability [2][3]. Group 2: Market Behavior - Cryptocurrencies behave similarly to high-risk tech stocks, lacking the backing of established companies, making them highly sensitive to investor sentiment and prone to sharp declines during market panic [3][4]. - During significant market sell-offs, such as the October Black Friday event, Bitcoin's value dropped from $122,000 to $102,000, while safe-haven assets like PAX Gold appreciated [3]. Group 3: Regulatory Environment - The cryptocurrency market remains largely unregulated compared to traditional stocks, leading to speculation that future regulations could enhance transparency but also diminish the appeal of cryptocurrencies [5][6]. - Legislative efforts, such as the U.S. GENIUS Act and the CLARITY Act, aim to establish a regulatory framework for digital assets, which could significantly impact the industry [6]. Group 4: Economic Instability - Economic instability exacerbates the risks associated with cryptocurrencies, as companies holding digital assets as part of their reserves face increased volatility in their balance sheets [7]. - Sharp market declines can rapidly devalue token holdings, undermining both balance sheets and investor confidence [8].

Digital Asset Overview - PAX Gold (PAXG) is a digital asset backed by physical gold [1] - PAXG allows for instant and secure swapping with other assets via Trust Wallet [1] Trading Platform - Trust Wallet supports PAXG trading [1] - Users can easily swap to/from PAXG within Trust Wallet [1]

Market Trends - PAX Gold and Tether Gold are the only two cryptocurrencies showing positive performance today, suggesting a trend towards gold-backed digital assets [1]