Pax Gold (PAXG), an Ethereum-based token backed by physical gold, has experienced a historic rally, reaching an all-time high of $4,407.52, surpassing spot gold's peak of $4,364.82. On Binance, the token briefly spiked to $4,790, with targeted trades even pushing it above $5,000, reflecting intense bidding pressure and liquidations of short positions.
This surge drove daily trading volumes to a record $854 million, highlighting unprecedented demand. PAXG traded at a premium to spot gold, partly due to its tokenized nature, which allows rapid inflows without physical settlement limitations. However, this premium raises concerns about potential sharp corrections, as seen in past flash-crashes.
The rally coincided with Bitcoin retreating to the $108,000 range, prompting investors to rotate into gold-backed tokens as a safe haven. On-chain analysis revealed funds flowing into PAXG and similar assets, with total locked value in gold-backed tokens now at $3.39 billion. This shift underscores the growing appeal of tokenized commodities during market volatility.
Despite PAXG's momentum, Tether's XAUT remains the largest gold-backed token by market capitalization, trading at $4,373.04 with claims of higher reliability. The competition highlights PAXG's challenge to XAUT's dominance, though its volatility suggests corrections could follow swiftly.
