A crypto whale has deployed a sophisticated leveraged DeFi strategy to accumulate a massive $38.4 million position in tokenized gold over the past 20 days, according to blockchain analytics firm Lookonchain. The entity, identified by wallet address 0x8522, purchased 8,337 units of the gold-backed token XAUt using a looped borrowing technique on the Aave lending protocol.
The strategy involved borrowing approximately $18.3 million worth of the stablecoin USDe from Aave, routed through the decentralized exchange aggregator CoW Swap. The whale repeatedly borrowed $11,600 in USDe per transaction, swapping it for about 2.51 XAUt each time. Looped borrowing is a DeFi tactic where a user supplies an asset as collateral, borrows against it, and then re-supplies the borrowed amount back into the protocol, effectively magnifying their exposure. This process, which gained prominence during the 2020 yield farming boom, significantly increases liquidation risk if asset prices become volatile.
This aggressive accumulation comes as global gold prices show signs of cooling after a record-breaking rally. Spot gold extended losses, slipping 0.1% to $4,610.86 per ounce, after touching a record high of $4,642.72 earlier in the week. The pullback is attributed to stronger US economic data, including lower-than-expected jobless claims, and a stronger US dollar. Despite the recent dip, gold is on track for a weekly gain of about 2%.
The whale's move aligns with a broader institutional trend favoring gold over Bitcoin in 2025. A CryptoQuant report reveals a pronounced performance divergence: from December 1, 2024, to December 1, 2025, Bitcoin depreciated by 11.24% while gold appreciated by 61.4%. As of the report, gold was trading near $4,580 per ounce, with Bitcoin around $95,300. This shift is framed as a reflection of short-term risk aversion amid persistent inflation and geopolitical uncertainty.
Institutional expectations further support the gold narrative, with major banks like JPMorgan Chase and Bank of America projecting gold prices to reach $5,000 in 2026. Within the digital asset space, tokenized gold products like Pax Gold (PAXG) and Tether Gold (XAUT) dominate on-chain commodity exposure, representing close to 80% of the sector. CryptoQuant suggests the move away from Bitcoin is tactical, with capital temporarily seeking safety in gold while awaiting clearer macro signals before potentially rotating back into higher-growth crypto assets.
