The tokenized gold market experienced a significant surge on January 21, 2026, as assets like Tether Gold (XAUT) and Paxos Gold (PAXG) decoupled from a broader cryptocurrency sell-off. This rally was driven by a "triple threat" geopolitical crisis involving Greenland's sovereignty tensions, Denmark's liquidation of U.S. Treasury holdings, and fiscal instability in Japan, which collectively triggered a massive flight to safety.
XAUT's performance was particularly notable, with its price breaking through the $4,850 level to trade around $4,859.79, marking a nearly 10% gain since the start of the year. This contrasted sharply with major cryptocurrencies; Bitcoin (BTC) fell over 3% below $88,000, while Ethereum (ETH) dropped nearly 7% to around $2,970. The broader market saw over $1 billion in liquidations within 24 hours.
A key institutional catalyst was the integration of XAUT on the Mantle Layer-2 network via Bybit, announced on January 20. This enabled zero-fee withdrawals for a limited time and facilitated the use of XAUT in DeFi protocols for lending and yield generation, contributing to a 131.91% spike in 24-hour trading volume to $336 million.
Meanwhile, PAXG emerged as a top-10 most traded asset on the Hyperliquid derivatives platform, trading at a premium to spot gold at $4,841.56. Whales on Hyperliquid built overwhelmingly long positions, with over 89% of PAXG open interest bullish. Total open interest for PAXG approached a three-year high above $220 million.
The structural shift toward tokenized gold is underscored by 2025 trading volume reaching $178 billion, with $126 billion in Q4 alone—surpassing all but one U.S. gold ETF. Tether's XAUT dominated, accounting for 75% of the tokenized gold sector's Q4 volume. The sector's total market cap grew 177% in 2025 to over $4.4 billion.
Gracy Chen, CEO of Bitget, commented on the macro shift: "With tariffs back in focus, capital is likely to rotate toward defensive assets, where gold dominates. As for the outlook, we see gold targeting the $5,000 level." Technical analysis indicates XAUT's next major resistance is at the $5,000 psychological level, with potential to reach $5,083.
