Tokenized Gold Sees Record Inflows as Crypto Markets Stall

Crypto investors are increasingly turning to tokenized gold as digital asset markets remain sluggish, driving record inflows into Paxos Gold (PAXG) in January. As volatility and uncertainty weigh on cryptocurrencies like bitcoin, blockchain-based gold tokens are emerging as a popular alternative for investors seeking stability and protection.

According to data from DefiLlama, Paxos Gold attracted more than $248 million in new capital during January alone, marking its highest monthly inflow on record. This surge pushed PAXG’s market capitalization above $2.2 billion, making it the second-largest tokenized gold asset in the market, behind only Tether Gold (XAUT). Paxos Gold is fully backed by physical gold stored in London vaults that meet London Bullion Market Association (LBMA) standards, giving investors confidence in its underlying value.

The strong demand for tokenized gold aligns with a powerful rally in the gold market itself. Gold prices surged past $5,300 per ounce in January, rising roughly 22% during the month and gaining more than 90% over the past year. In contrast, bitcoin has declined by over 10% year-on-year, while the broader cryptocurrency market has struggled to regain momentum. This divergence has prompted many crypto investors to reassess their portfolios.

Market participants say tokenized gold offers a unique blend of traditional safe-haven appeal and modern blockchain functionality. James Harris, CEO of crypto yield platform Tesseract Group, noted that tokenized gold has become more attractive due to its improved transferability and divisibility. Unlike physical bullion, tokens such as PAXG and XAUT can be easily transferred, traded, or held in crypto wallets, while still representing fractional ownership of real gold.

Tokenized gold allows investors to access a centuries-old store of value without the logistical challenges of storage, insurance, or transportation. This convenience, combined with growing macroeconomic uncertainty, is fueling adoption across both crypto-native and traditional investor segments.

The broader tokenized gold market has now surpassed $5.5 billion in total value, according to CoinGecko, reaching an all-time high. As gold prices climb and digital asset markets tread water, tokenized gold is increasingly positioned as a bridge between traditional finance and blockchain technology, offering stability, accessibility, and liquidity in uncertain times.