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Invest in Gold via Crypto?! 🏅🚀

March 31, 2023

31 March 2023

The newsletter is put together by Giottus Crypto Platform and The News Minute’s Brand Studio. You can read all the previous issues of Cryptogram

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Hello there,

Yay!With investors turning to riskier options and sending some love Bitcoin’s way, the past week has been great for our spirits. But other than that, it has been a boring few days for the crypto ecosystem silently starting to build new things, rolling out products, and fostering partnerships. Highlight of the week, of course, was… (and on that note, our Top-5 for this issue)

1

Gold-backed crypto trading rolled out in India, with Tether Gold launched on Giottus. You can trade

.

2

is officially up and running with the launch of its final mainnet, allowing Ethereum to be used at a bigger scale, more security and a lot more EVM compatibility. This is great news for ETH and MATIC.

3

Ethereum’s two important updates, Shanghai and Capella, have a date now: April 12, 2023. If this goes smoothly, it is another milestone for Ethereum.

4

Avalanche launches

, a new initiative for creators to leverage Web3.

5

A wave of diffidence is sweeping through the US over the government’s attempts to “kill crypto”, as this editorial from Coindesk puts it. We earlier heard about Coinbase’s attempt to expand out of the US, and now Sushi Swap CEO says he is not feeling inspired. All we can tell our US friends is…

WEEKLY MACROS

Total crypto market cap - $1.22 trillion -

0.8%

Bitcoin market cap - $548.87 billion -

1.1%

The dollar index (DXY) - 102.16 -

0.5%

Bitcoin Dominance - 44.79% -

0.4%

Crypto Fear and Greed Index

- 60 - The market is in greed and almost at the same level as last week since multiple bearish news like Commodity Futures Trading Commission (CTFC)'s charges against Binance hasn't really caused any capitulations and the market seems to have absorbed all the shocks.

WEEKLY PRICE TRACKER

Price movements from last Friday

BTC Watch

0.5% as CTFC sued the world’s largest exchange Binance for trading and derivatives law violations.

ETH Watch

1% as BTC’s price action continues to dictate the largest altcoin in the crypto market.

Altcoins Watch

XRP

:

20% as investors are gaining confidence with respect to the understanding of the regulatory authorities about classifying whether crypto falls under commodity or security.

XLM

:

18% as Stellar (XLM), a decentralized p2p network that connects financial systems, breaks crucial resistance levels on its way up.

APT

:

12% as a layer-1 blockchain with weak network effects was affected by the macro environment.

WHAT'S HOT

Coins to watch out for

Conflux (CFX)

is a public layer-1 blockchain that was made to power decentralized applications (dApps), e-commerce, and Web 3.0 infrastructure by being more scalable, decentralized, and secure than existing protocols. The token is arguably enjoying a monopoly in China (given the ban on crypto) after securing a deal with one of their big social media networks called Redbook.

Polygon (MATIC)

- Having launched its highly-anticipated zkEVM Ethereum scaling solution on the Ethereum mainnet, often called the holy grail of Ethereum scaling, it stands for zero-knowledge Ethereum Virtual Machine, a type of scaling solution for Ethereum. MATIC is expected to hold strong under bearishness and might rally hard if BTC turns bullish.

Project to watch out for

Ethereum Name Service (ENS)

is a decentralized and open-source technology built on the Ethereum Blockchain. It provides a naming system that allows people to map human-readable names like “giottus.eth” to machine-readable identifiers like Ethereum addresses. It’s one of the projects that had great traction even during the bear market. So, it might be worthwhile to get a .eth name (parallel to a .com name on the internet) for yourself if you are into the crypto world.

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THE HOT TAKE

Gold-backed crypto to help beat volatility

For centuries, gold has been a sought after investment vehicle in India. The ability to counter market trends with minimal risk has been its key selling point. As the crypto ecosystem evolves, one of its use cases is to tokenize real world assets on the blockchain. The initial implementation of this comes in the form of crypto-based gold assets – Tether Gold (XAUT) and PAX Gold (PAXG) being the popular ones. Today, we analyse its purpose and enlist key advantages of having it as part of your crypto portfolio.

Gold-backed crypto assets (XAUT, PAXG) are digital currencies that have gold as their underlying physical asset. A company issues a token that represents a certain value of gold – an ounce for example. The issuing company then stores physical gold in bank vaults to back the tokens in the market. The price of this asset varies in accordance to the global market value of gold.

Some advantages of investing in a gold-backed crypto asset are:

  • Greater liquidity through fractional ownership – investors can buy/sell gold within 2 mins – and anytime (24/7).

  • Easy accessibility – just login to your exchange.

  • Tokenized commodities don’t require physical storage – easy to ‘transport’ or carry with you.

  • No territorial barriers – anyone with an internet connection can trade.

While advantages are clear, there may be some risks/issues we need to be aware of with gold-backed crypto tokens

  • As secure as your personal crypto wallet – if you lose your keys, you lose ownership

  • Gold-based instant loans aren’t developed fully as a product – some protocols allow you to lend your gold-backed tokens for instant loans but we believe this needs more time. The current product is ideal for long term investors in gold

  • Trust in the company backing the token – always go for the reputed ones. We recommend Tether Gold (https://gold.tether.to/) and PAX Gold (https://paxos.com/paxgold/) for your research and consideration

  • Inability to use as jewellery :)

Okay, now we get to the interesting part – why should you even consider gold-backed crypto in your portfolio?

1. Gold is a hedge against inflation in India

An inflation hedge is an investment that protects investors from reducing the power of a currency due to a fall in its value because of rising prices. Gold is considered as an excellent hedge against inflation due to its organic rise in value over the years. According to the World Gold Council, for every 1% rise in inflation, the demand for gold in India soars by 2.6%.

Source: Goldprice.org

2. Gold outperformed Bitcoin in 2022

2022 was a dull year for BTC enthusiasts as the #1 crypto asset slid more than 60% in value. Whereas, gold was mostly flat during the year and would have preserved your capital if you had some exposure to it.

Source: CNBC

3. Bitcoin outperformed Gold in Q1 2023

Bitcoin is up nearly 70% this quarter while gold has gone up by 18% - this means BTC has outperformed gold this year.

Source: TradingView

It feels counter-intuitive: how is this one of the reasons to have exposure to gold-backed crypto when BTC does better than gold?

Gold and Bitcoin together in your portfolio can offset some of the volatility in the market and keep your portfolio stable/rising when the market is bearish and you gain considerably when a rally comes by. Overall, this is a good risk-reward structure for long-term investors.

What is the ideal way to begin investing in gold-backed crypto?

  • Allocate a share of your crypto portfolio to gold when the market is volatile: 2023 is likely to be a topsy-turvy year for all assets. Capital preservation for an eventual lull in markets is ideal. Gold can be an effective strategy (along with stablecoins) to enable this. We recommend that up to 20-30% of your crypto portfolio can be in gold tokens.

  • Invest in Indian exchanges that have listed these tokens: It is always preferable to invest via Indian exchanges given the addition of crypto to PMLA act. That way, you are sure to abide by requirements with respect to GST as well as safe storage of assets.As secure as your personal crypto wallet – if you lose your keys, you lose ownership

Full disclosure: Giottus is officially listed as one of the global exchanges (and the only Indian exchange) that has listed Tether Gold on their website.

Source: https://gold.tether.to/

That’s it for this issue, see you next week.

If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

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