Crypto: Breaking Gold Is Acting Like The Hedge Bitcoin Promised To Be

As the dollar weakens, investors are turning to gold — onchain and off — while Bitcoin increasingly plays a supporting role in hedging currency risk.

Bitcoin (BTC) has long been promoted by its most ardent supporters as a hedge against monetary debasement, but as the US dollar slides to multi-year lows, the market’s clearest flight to safety is emerging elsewhere: in gold.

Over the past year, investors have rediscovered the precious metal through both traditional channels and blockchain rails. Tokenized gold products like XAUt are gaining traction alongside spot prices, offering digital-native exposure to a centuries-old safe haven as inflation concerns and currency stress intensify.

Bitcoin is still very much in the picture, though increasingly as a secondary beneficiary. Actively managed exchange-traded funds (ETFs) are pairing BTC with gold as complementary defenses against fiat erosion, positioning Bitcoin less as a proven hedge and more as a higher-volatility companion to hard assets.

This week’s Crypto Biz traces that shift, from tokenized bullion and hybrid ETFs to Wall Street’s growing embrace of stablecoins and crypto banking charters. In periods of currency stress, gold still leads. Crypto is learning how to follow.

It’s not just traditional investors piling into gold. Digital asset investors are increasingly turning to tokenized versions of the precious metal as the US dollar weakens and concerns over currency debasement and inflation intensify.

Tether said its gold-backed stablecoin, Tether Gold (XAUt), now accounts for more than half of the tokenized gold market, with a total market value of more than $2.2 billion. As of the end of the fourth quarter, 520,089 XAUt tokens were in circulation, each backed one-to-one by physical gold bullion, according to the company.

The surge in demand comes as gold prices climbed above $5,300 per troy ounce, up about 90% over the past year, while the US dollar continues to erode. Bloomberg’s spot US dollar index recently fell to its lowest level in four years.

Asset manager Bitwise has launched a new ETF designed to protect investors from currency debasement by pairing Bitcoin with gold and other precious metals.

The Bitwise Proficio Currency Debasement ETF debuted on the New York Stock Exchange under the ticker BPRO. The actively managed fund is designed to hedge against the declining purchasing power of the US dollar and other fiat currencies.

Source: CoinTelegraph