Gold sees the largest drop in ten years! XAUt/PAXG simultaneously experiences a big dump of 6%, with funds rotating to Bitcoin as expectations heat up.

As the Spot gold price experienced a big dump to $4,122 per ounce, marking the largest intraday drop since 2013, the prices of tokenized gold Tether Gold (XAUt) and PAX Gold (PAXG) have both fallen over 6% in the past 24 hours. Despite a slight recovery in the overall crypto market, with Bitcoin's price rebounding to over $112,000, these two major tokenized gold Tokens have fallen against the trend, raising analysts' speculation that capital is flowing out of gold and rotating into Bitcoin. However, as Bitcoin retraced to around $108,000 again, it remains uncertain whether this trend can be sustained.

Tokenization of gold and Spot gold prices fall simultaneously

As the price of Bitcoin slightly rises above $112,000, the top two market capitalization tokenization gold tokens have defied the overall trend of the crypto market.

· Price drop: As gold prices fell by 6% to below $4,120/oz, the tokens backed by physical precious metals also experienced a big dump. XAUt and PAXG have both fallen over 6% at the time of writing, trading around $4,120.

· Market sentiment reversal: The general rise in the crypto market is driven by positive earnings reports from Wall Street, leading to improved sentiment for risk assets. However, gold has experienced its largest single-day fall in over a decade, and this drop also marks the steepest intraday decline since 2013.

The Narrative of Capital Rotation and the Refutation of “Golden Bug”

The price trends of XAUt and PAXG align with the decline of gold, a top safe-haven asset, which has prompted analysts to predict potential capital rotation: funds will shift from gold to risk assets, especially Bitcoin.

· Analyst rotation expectations: Optimistic sentiment for risk assets is driving potential rotation of funds from gold to Bitcoin. The slight increase in Bitcoin's price during the big dump of gold is seen as an important support for this rotation narrative.

· Peter Schiff's viewpoint: However, economist and prominent gold advocate Peter Schiff has a different perspective. He acknowledges that this fall is “a huge shock,” but believes it merely provides Bitcoin holders with another opportunity to sell digital assets and “buy real gold.”

· Correction after price peaks: The prices of XAUt and PAXG reached highs of $4,391 and $4,430 respectively on October 17, 2024, in sync with the parabolic rise of gold. As the momentum that pushed gold to historic highs comes to a halt, the tokens issued by Tether and Paxos are also retracing gains.

Conclusion

The synchronous big dump of tokenized gold and spot gold strongly proves the accuracy of these RWA tokens in relation to the underlying assets, and highlights the severe fluctuations in the current global macro market sentiment. As gold faces significant profit-taking, the strong performance of Bitcoin undoubtedly enhances its narrative as a digital safe-haven asset. While traditional “gold bugs” see this as an opportunity to buy physical gold, for crypto investors, this decline provides potential inflow space for Bitcoin and a broader range of risk assets.

Disclaimer: This article is for informational purposes only and does not constitute any investment advice. The cryptocurrency market is highly volatile, and investors should make cautious decisions.