Many bitcoiners are former gold bugs who believe in “hard money,” so one crypto company is hoping digitized gold will attract more traders.
Paxos, the New York-based exchange and stablecoin issuer, just launched a gold-backed crypto asset called Pax Gold (PAXG), with each ethereum-based token encapsulating the legal title to a physical bar of gold stored in the Brink’s London vault. Pax Gold has been approved by the New York Department of Financial Services.
“It’s not a representation of the commodity, it’s actual legal title to it,” Paxos CEO Chad Cascarilla told CoinDesk. “This is the exact point of the blockchain, the exact premise, that you can now make [assets] easily moveable and divisible and not be tied to a manual, physical process.”
Each token costs the same as an ounce of gold and can be redeemed for a physical bar at partnering institutions such as Bullion Exchanges in New York. Cascarilla said Paxos will expand its list of global partners from the traditional commodities industry to ensure users can claim real gold even if they’re not in London or New York. Plus, the crypto loan startup SALT now offers PAXG-backed loans as well, available in fiat or stablecoins such as PAX, TrueUSD or USDC.
“We’re going to do more products like this where we are taking real-world assets and putting them on the blockchain,” Cascarilla said.
Still, it remains to be seen whether tokenized gold will appeal to crypto enthusiasts. Messari co-founder Dan McArdle told CoinDesk that assets issued by and custodied with centralized entities don’t rival bitcoin’s role as “digital gold.”
“Bitcoin achieves all of gold’s relevant properties, plus a lot more, and is just better gold for the modern era,” McArdle said. “Bitcoin achieves its properties precisely because it has no centralized or federated anchors to the physical world. You simply can’t get the trustless/uncensorable properties of bitcoin if some relatively small set of people/entities has to manage physical objects represented on a blockchain.”
Paxos will need to find an audience of gold traders who are interested in crypto beyond bitcoin, as traditionalists on both sides are wary of tokens.
Bitcoin skeptics like Roy Sebag, founder of the precious metals custodian Goldmoney, don’t believe a self-custodied, relatively fungible cryptocurrency would bring new and compliant use cases to the broader gold market. It still requires a know-your-customer process.
“There’s zero value being added in terms of a decentralized blockchain,” Sebag said. “A closed system that is permissioned would be fine. We’ve already been doing that for five years.”
Indeed, the World Gold Council estimated gold-backed financial products like exchange-traded funds accounted for nearly $100 billion of the global market holdings in 2018. Paxos’ commodities trading platform, Post-Trade, secured a chunk of that pie by processing precious metal trades since July 2018. Now, with Pax Gold, retail investors will be able to participate in a broader range of digital gold trades beyond institutional platforms.
“We’re acting at that gateway, as a trusted holder of the assets, but also has trusted verifier of participants,” Cascarilla said. “Just like our Pax stablecoin, it’s audited.”
For traders who might want to buy gold on-the-go and then pick it up in another location, Cascarilla believes Pax Gold could offer a regulated alternative to physical ownership.
“You can own that gold but you don’t have to pay a custody fee, and you can send it around the world 24 hours a day, 7 days a week,” he said. “This is a groundbreaking product in the history of gold.”
Binance has announced the acquisition of crypto exchange JEX in a bid to boost its crypto derivatives offerings for pro traders.
Seychelles-registered JEX offers spot and derivatives (including options and futures) trading in cryptocurrencies such as bitcoin and ether.
Going forward under Binance management, the derivatives exchange will be known as Binance JEX. JEX offers its own token, also called JEX, which will continue to be guided by its existing foundation, Binance said.
Binance plans to first distribute the tokens to users through “marketing activities and community incentives” before ultimately clawing back and burning them via means including trading commissions, according to the announcement.
Binance did not disclose the terms of the acquisition deal.
“JEX has a seasoned developer team with proven experience in cryptoasset product development. JEX has developed solid derivatives product offerings including perpetual contracts and options, which are aligned with Binance’s product roadmaps in the cryptoasset derivatives market,” said Binance co-founder Yi He.
Just yesterday, Binance announced that it had made two testnets for its planned futures platform available for user testing, with competitions to encourage user participation before a live launch.
Bitcoin (BTC) could drop to $9,000 in the next 24 hours, having strengthened the short-term bearish case with a drop to one-month lows earlier today.
The top cryptocurrency by market value fell to $9,320 at 07:36 UTC today, the lowest level since July 28, according to Bitstamp data.
Prices fell 4.48% on Wednesday, confirming a downside break of a recent narrowing price range represented by trendlines connecting Aug. 20 and Aug. 26 highs and Aug. 15 and Aug. 22 lows.
Essentially, sellers came out victorious in a tug of war with the bulls, signaling a resumption of the sell-off from the Aug. 6 high of $12,325.
That bearish view has been bolstered by BTC’s drop to four-week lows below the July 15 low of $9,467. As a result, a deeper slide to levels below $9,000 could be in the offing.
As of writing, BTC is changing hands at $9,415 on Bitstamp, representing a 7 percent drop on a 24-hour basis.
The range breakdown and the drop to one-month lows have exposed July’s low of $9,049.
Supporting the bearish case are the downward sloping 5- and 10-day moving averages. The 14-day relative strength index (RSI) has also breached key support (horizontal line) and is reporting bearish conditions with a below-50 print.
What’s more, the cryptocurrency has also found acceptance below the 100-day moving average (MA) – a level which acted as strong support in the seven days to Aug. 27.
Further, the 50-day moving average is beginning to trend south in favor of the bears.
Trading volumes picked up as BTC dived out of the narrowing price in the U.S. trading hours yesterday. In fact, the selling volume witnessed in the four hours to 20:00 UTC on Wednesday was the highest since Aug. 7.
All-in-all, the stage looks set for a deeper drop in BTC. Acceptance below the July low of $9,049 would open the doors to $8,500.
The bearish case would be invalidated if the cryptocurrency finds acceptance above Wednesday’s high of $10,280, although, as of writing, that looks unlikely.
Weekly close is pivotal
Bitcoin’s weekly line chart shows the cryptocurrency has charted a double top bearish reversal pattern with neckline support at $9,533. As of writing, prices are trading below the neckline support.
The breakdown, however, would be confirmed, only if prices print a UTC close below $9,533 on Sunday. That would create room for a sell-off to lows below $7,550 (target as per the measured move method).
The double top breakdown, if confirmed, would imply an end of the rally from lows near $4,050 seen on April 1.
It is worth noting that that the moving average convergence divergence histogram has already confirmed a bearish reversal with a drop below zero – the first since February.