Tokenized Gold Tops $1 Billion Market Cap Amid Banking Crisis Concerns
Tokenized Gold Market Cap Surpasses $1 Billion
Tokenized gold has recently achieved a significant milestone, with its market capitalisation surpassing $1 billion amid growing concerns about the stability of the banking system and increasing interest in alternative investments. Tokenized gold refers to digital tokens that represent ownership of physical gold, providing investors with a way to trade and hold the precious metal in a digital format.
Alternative Investments Gaining Popularity
Investors have been seeking alternatives to traditional investments such as stocks and bonds, which have experienced significant volatility in recent years. As a result, they have increasingly turned to alternative assets such as cryptocurrencies and tokenized assets like gold as a means of diversification and hedging against market volatility.
Benefits of Tokenized Gold Over Physical Gold
Tokenized gold has gained popularity due to its ability to provide investors with exposure to physical gold without the logistical challenges of storage and transportation. Unlike physical gold, which requires secure storage and transportation, tokenized gold can be easily traded and held in digital wallets. This convenience makes tokenized gold accessible to a wider range of investors and removes many of the barriers to entry associated with investing in physical gold.
In addition, it also offers greater transparency and accessibility than traditional gold investments. Investors can track the movement of the underlying physical gold and verify the authenticity of the tokens, mitigating concerns around the integrity of the traditional gold market such as counterfeiting and price manipulation. This increased transparency and accessibility makes tokenized gold a more appealing investment option for investors looking for a more secure and trustworthy way to invest in gold. The recent surge in the market capitalisation of tokenized gold is also a reflection of concerns around the stability of the banking system amidst the ongoing global financial crisis. Governments around the world are injecting trillions of dollars into their economies to combat the economic fallout from the COVID-19 pandemic, leading to concerns about the long-term impact on inflation and the stability of the banking system.
Historically, gold has been viewed as a safe-haven asset during times of economic uncertainty, and tokenized gold offers investors a way to access the benefits of physical gold without the logistical challenges. In this sense, tokenized gold may be seen as a form of digital gold, providing investors with a means of diversification and hedging against the potential risks of inflation and financial instability.
Risk and Potential Downsides
However, as with any investment, tokenized gold carries its own risks and potential downsides. One of the primary concerns around tokenized gold is the potential for fraud and the lack of regulation in the industry. As with any emerging industry, there are risks associated with investing in tokenized gold, and investors should conduct thorough research and due diligence before investing.Another concern associated with tokenized gold is its correlation with the price of physical gold, which can be volatile in its own right. While tokenized gold may provide investors with exposure to physical gold without the logistical challenges, it is important to remember that it is still a speculative investment and subject to the same risks and potential downsides as any other investment.
Despite these concerns, the increase in the market capitalization of tokenized gold is a positive development for the broader digital asset market. It provides further evidence of the growing interest in digital assets as an alternative to traditional investments and highlights the increasing importance of tokenization in the financial industry. Tokenization has the potential to transform the way we invest and trade assets. By creating digital representations of physical assets, tokenization removes many of the barriers to entry associated with traditional investments and provides investors with greater transparency and accessibility.
Final Thoughts
To conclude, the recent surge in the market capitalization of tokenized gold is a reflection of the growing interest in alternative investments and the potential benefits of tokenization in the financial industry. While tokenized gold may not be suitable for every investor and carries its own risks, it represents a significant development in the broader digital asset market and highlights the potential for tokenization to transform the way we invest and trade assets. As the industry continues to mature and regulations are put in place, we are likely to see an increasing number of investors turning to tokenized assets like gold as a means of diversification and hedging against market volatility.
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The Correlation Between Gold and Bitcoin
The digital age embraces new technology and adapts to it very quickly. Nowadays, investors have an opportunity to diversify their portfolio with digital assets and not just physical ones. However, while digital assets have risen in fame in the last few years, their volatility and unpredictability have investors question whether or not these types of investments are actually safe. On the other hand, gold has always been a “safe bet” among investors.
The main reason is that gold is an excellent hedge against inflation, global instability and economic crisis. As for Bitcoin, many people have claimed that it’s the digital gold, but so far, Bitcoin was unable to provide the same level of investment security as gold. Many people still wonder if Bitcoin and gold are correlated. When comparing prices, the Bitcoin price is certainly very volatile, while gold pretty much retains its price with slight variations. Here’s more insight into the correlation between gold and Bitcoin.
Difference of investment
As mentioned before, investors have an opportunity to opt for digital assets instead of just physical ones. The rise of Bitcoin’s price in 2017 that was alongside a price increase in gold made people believe these two assets are correlated. However, people who invested in Bitcoin did so mainly because this digital asset was unregulated by governments and they intended to reap the benefits of that situation.
On the other hand, people investing in gold were looking for a safe investment to secure their funds, as gold is usually used for that. In other words, the cryptocurrency market was explored by investors who were speculating on the outcome, while gold was sought after by investors looking to secure their funds. Simply put, there was no direct correlation other than the investors’ interest in both assets during the same period.
Different assets
The difference between the assets upholds their lack of correlation. Gold is a physical asset, which means its use and properties are much more flexible than Bitcoin which is purely a digital asset. Gold has inherent value, it can be used in various industries and has cultural value as well. That means that gold is, and will always be highly sought after and on high demand. That’s why the gold price has remained steady throughout the years compared to Bitcoin prices that experience extreme volatility. For instance, Bitcoin reached its top price of $17.900 on December 22, 2017.
On the 5th of February, 2018, the price of Bitcoin fell to $6.200, which is more than 50% decrease in less than two months. The price of gold is determined by the global economic situation and demand, whereas digital assets are unregulated and their prices are uncertain at best. For example, gold prices go up whenever there are fluctuations in the stock market. Investors prefer an asset that can secure their funds or even yield a profit as opposed to an asset that’s too risky.
Market dynamics
The gold market is more mature and well-developed, as well as regulated. On the other hand, the crypto market is fairly new and still in the process of adjusting. The increased popularity of digital assets also leads to the adoption of more cryptocurrencies. Aside from Bitcoin, there are over a thousand different currencies on the market. However, not all currencies are sought after or have the potential to become investments. That’s why the crypto market still cannot correlate with gold, but that doesn’t mean digital assets won’t experience more stability in the future.
Even though the idea behind Bitcoin and blockchain technology was originally to be unregulated by officials and decentralized from a banking system, it seems that it does require a bit of regulation in order to stabilize and operate on an optimal level. The lack of security and safety does force investors to tread carefully when investing in cryptocurrencies, whereas gold can provide certain security even in the worst of scenarios.
Relationship between assets
So far, experts have been arguing about the existing or nonexistent correlation between gold and Bitcoin. Regardless of the current situation, there’s undeniably a relationship between the two. Both assets are considered hedges against inflation and global economic difficulties. However, gold is still perceived as a more stable investment than digital assets.
The fact of the matter is that whenever cryptocurrency value decreases, gold prices go up, as investors return to their “safe haven” investment. The main reason is digital asset volatility. Increased volatility means greater risks and investors would prefer not to risk it, making investments that are meant to secure their funds. With that in mind, when the digital currency market stabilizes, the relationship between these two assets may improve and there may even be more correlation between them as well.
Whether there’s a correlation between gold and Bitcoin is still debatable. Where one party sees a correlation, others see coincidence. That’s why it’s difficult to determine the relationship between these two assets. As for now, gold is considered a less risky and a more flexible investment, whereas Bitcoin, although perceived as a hedge, is considered too volatile to overtake gold. From an investor’s point of view, gold and digital assets are two very different assets.
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Ether price is reaching its all time highs
Ether price, or the digital currency that fuels the Ethereum blockchain, is approaching its all-time highs set last year.
In fact, price of ether rose of about 60% during last week, hitting $20.67 yesterday, after opening at $13 on February 25th.
Ether price and Ethereum Enterprise
This increase might be the result of the official launch of Enterprise Ethereum Alliance, a new working group focused on the Ethereum blockchain with important members including Microsoft, JP Morgan, Santader, etc.
This consortium has the main goal of using the ethereum tech within enterprise-grade blockchain implementations.
So this recent news may have led to the increase of confidence in the technology and in the linked digital currency.
Digital currencies are growing
Recently bitcoin price is also growing, reaching its all time highs, together with the altcoin called Dash.
Among the others, bitcoin is undoubtedly the most used and known with a robust trading volume and bullish market sentiment.
Bitcoin has risen to several new highs in recent days, after failing to set new higher levels for more than three years. Also, bitcoin hits parity with the per-ounce price of gold last week.
Dash has rose more than 75% in the last week and upwards of 200% over the last month. In fact, the previously called Darkcoin reached its all-time high of $58.90 on 2nd March.
Multicurrency wallet for differentiated investments
If you want to invest in all these three digital currencies, you need a multicurrency wallet to store bitcoin, dash and ether coins at the same time.
Normally, if you want to have store different cryptocurrencies, you need to have ten different wallets, which is difficult to manage. Instead, thanks to HolyTransaction you can solve this problem, unifying everything in a single account.
For more info and fees (HolyTransaction has a fixed-rate exchange) click here.
Open your free digital wallet here to store your cryptocurrencies in a safe place.