The new safe haven: Gold-indexed tokens
We took a look at gold-indexed tokens. Can the cryptocurrency market, which has been supported by the US banking and debt crisis, be defined as the new “safe haven”? We talked to the experts.
There is no easy cure for what is plaguing the US financial system. The large number of defaults, coupled with record amounts of commercial mortgages expiring in 2023, and the problem of deposit runaways at regional banks are fueling fears about the health of its financial system.
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Wall Street analysts are currently busy testing the financial health of regional banks and knocking down weaker and riskier ones. With increasing numbers, they are moving away from sound banking tactics. Silvergate, Signature, and Silicon Valley Bank are just like the smoke that heralds the fire. It is almost clear that those who went bankrupt were not the last banks.
Banking stocks in the US have dropped 20 percent or more year-to-date. These types of declines often end when investors throw away their presumption of stable and secure stocks and erode confidence in financial institutions.
A change in money markets can naturally create surprising resources elsewhere — with the help of someone’s investment strategy. Just as cryptocurrencies, which were defined as risky in the past, have started to be described as a new “safe haven” despite the long winter.
Bitcoin saw the top of the last two weeks. The market value of cryptocurrencies also increased by about 2.14%, rising to $ 1.16 trillion. Investors are looking for ways to avoid a possible crisis with a crypto portfolio that reduces the risk of volatility. This increases the interest in stablecoins such as Tether Gold (XAUT) and PAX Gold (PAXG), which are indexed to gold per ounce. Before you plan, though, listen to the experts.
In the cryptocurrency market, investors are turning to stablecoins when they can’t find opportunities for returns. In the same way, investors who want to return to gold at a time when the demand for a safe haven is increasing in the markets also show demand for PAXG and XAUT.
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“I CHOOSE TOKENS TO PROTECT FROM FIT INFLATION”
From the point Dedeoğlu pointed out, Lord of Crypto continued and explained why he invested in Tether Gold and PAX Gold as follows; “I don’t think the return on gold will satisfy the crypto investor. My purpose of using Tether Gold and PAX Gold is to diversify my holdings in stablecoins and protect against inflation in fiat currencies rather than gain. It is a risky commodity to hold physical gold, difficult to transfer, and expensive to buy and sell . But you can buy, sell or transfer gold-indexed cryptocurrencies in seconds without any scissors, with zero commission. That’s why when I buy gold, I prefer gold-indexed coins, not physical gold,” he said.
HIGHLIGHTED LEVELS
Dedeoğlu stated that PAXG and XAUT follow the price of gold and shared the prominent levels and graphics; “Gold’s highest level is $ 2,073 in August 2020 . Its current price is at the level of $ 1,958. We do not see high wavelengths and volatility in the gold price as in the crypto money market. In order to talk about a rise again, we wait for it to rise above the $ 1,980 level again. In these days when the debt ceiling crisis is being discussed in the USA, we see that gold has not been able to seize the opportunity to rise. Therefore, it will be necessary to look at the bullish scenario of gold with suspicion in the coming periods. Because we are talking about an asset that has not yet broken its highest level of $ 2 thousand 70.”
Considering the two tokens indexed to one ounce of gold, can PAX Gold and Tether Gold be considered digital gold? A question appears. We asked the experts the question, we got two different opinions and two different answers:
Gold and Money Markets Specialist stated that he did not agree with the definition of digital gold and added; “Gold-backed cryptocurrencies can differentiate more positively in terms of security. I am not of the opinion that fixed participation cryptocurrencies, which were issued only for a certain amount, are still able to prove their maturity. In an environment where geopolitical tensions are escalating every day all over the world and inflation is still not lowered, gold-based crypto money will certainly attract attention, but it will not be like gold.”
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CEO of The Steve Group, disagrees; “I agree with the definition of digital gold. Tether Gold, which is the exact equivalent of physical gold, offers users the opportunity to buy and sell 24/7 at any time, access from anywhere in the world and carry it anywhere they want in cold wallets. These features, which are not possible with physical gold, are the biggest advantage of digital gold.”
Can digital projects replace physical gold?
As you know, we are in the age of digital revolution and our investment preferences keep up with the conditions of the age. Well, will there be a project that can replace physical gold and will the era of gold come to an end? Expert pointed out that Bitcoin will assume this role; “The fact that its supply is limited to 21 million units, that it will never exceed this number, and that we are still at the beginning of Bitcoin adoption all over the world shows us how valuable Bitcoin will be in the future,” he said.
“No substitute for gold”
Expert; “In the future, if a phrase such as the Bretton Woods Agreement is used for a crypto money project that the more gold there is, the more crypto money is used, it only makes crypto money safe in terms of this assurance, but it does not replace gold,” he said.
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From the regulated sector to risky assets
Bitcoin saw a peak of about 2 weeks, finding support from the agreement on the borrowing ceiling. The crypto money market was the most profitable from the US banking crisis. It is remarkable that these assets, which are defined as risky, are one of the preferred addresses for escaping from a regulated sector. Lord of Crypto evaluated this situation as follows; “The world is inevitably shifting to crypto as we see the woes in the traditional banking industry. Because to protect your savings from inflation, Bitcoin is still the safest and most profitable way in the long run, even though its price is fluctuating. As banking bleeds, I anticipate that the rate of transition to crypto will increase.”
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Gold is the safe haven, what about gold-linked tokens?
We describe gold as a safe haven, does this definition apply to tokens as well? Expert; “Each XAUT token is backed by one troy ounce of gold held in a vault in Switzerland. It has an exact physical gold equivalent. It is possible to talk about the safe harbor feature for digital gold like gold,” Expert said. “I think that cryptocurrencies will be more popular in the system in the future and we can find the international currency quality with crypto money, but we cannot define it as a safe haven for now,” he said.
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