Matrixport reports a growing trend of crypto funds investing in gold tokens due to US debt expansion and political influences, impacting gold's asset status.

Executive Summary

Matrixport reports that crypto funds are accelerating their investment in gold tokens, driven by concerns over U.S. debt expansion and political influences, particularly Trump's potential impact on the Federal Reserve. This trend underscores gold's increasing appeal as a safe-haven asset, although its correlation with Bitcoin (BTC) limits diversification benefits. The total amount of tokenized gold on the Ethereum chain has reached approximately $2.4 billion, reflecting a nearly 100% increase this year.

The Event in Detail

Gold has broken through historical highs, reaching $3,500 per ounce, a 33% increase since 2025, driven by global macro uncertainty and market volatility. Traditional institutions are exploring on-chain gold solutions, with the World Gold Council seeking to launch a digital form of gold to revolutionize the $900 billion physical gold market in London. According to David Tait, CEO of the World Gold Council, this would enable > "gold to be transmitted digitally as collateral for the first time in the gold ecosystem."

Market Implications

The shift towards gold tokens suggests a lack of confidence in U.S. fiscal discipline. Escalating criticism from Donald Trump against the Federal Reserve has raised concerns about the Fed’s independence. Analysts predict that gold prices could surge to $5,000 an ounce if Trump's actions lead to a loss of investor confidence in traditional assets. Goldman Sachs analysts suggest that a Federal Reserve crisis could diminish the U.S. dollar’s global reserve currency status, benefiting gold.

Expert Commentary

Bitwise's André Dragosch argues that Bitcoin increasingly serves as a counterweight to bond market stress, while gold retains its role as a safe haven during equity downturns. AInvest recommends a 1–5% allocation to Bitcoin and 10–15% to gold, creating a hybrid strategy that leverages Bitcoin's growth potential and gold's crisis resilience. > Empirical studies support this approach: hybrid portfolios achieved Sharpe ratios of 1.5–2.5 in 2025, outperforming both assets individually.

Broader Context

Regulatory considerations for gold tokenization include Crypto Asset Service Provider (CVSP) licensing, Customer Due Diligence (KYC), Anti-Money Laundering (AML) compliance, and tax liabilities. Gold-backed tokens can be categorized as commodity-based tokens or asset-backed tokens, depending on the rights provided. The increasing adoption of gold tokens reflects an innovative financial model at the intersection of traditional store-of-value instruments and digital technology. Major gold tokens include PAXG and XAUT, with Tether minting 129,000 XAUT tokens worth approximately $455 million in early August.

Historical trends show a strong correlation between Bitcoin and gold, especially during periods of economic uncertainty. Goldman Sachs projects that Bitcoin could surge if gold hits $5,000 an ounce, potentially rising to $220,000.