Onchain Markets Assume Full Pricing Control as Futures Halt
Tokenized gold assets have effectively seized control of global gold price discovery, a shift that has become absolute during the weekly closure of traditional futures markets. As CME gold futures halt trading at 5:00 pm ET on Friday and remain dormant until reopening at 6:00 pm ET on Sunday, onchain markets are responsible for virtually 100% of visible price formation during that interval.
This transition marks a structural change in how bullion prices are established globally. With regulated futures markets inactive and most remaining activity confined to unreported private over-the-counter deals in Asia, digital assets like PAX Gold (PAXG) and Tether Gold (XAUt) have emerged as the only continuously available trading venues. Consequently, price movements occurring on blockchain networks during the weekend are now the primary signal that traditional markets must reconcile with upon reopening.
"In terms of publicly visible price formation, onchain markets are responsible for virtually 100% of weekend price discovery," said Iggy Ioppe, chief investment officer at liquidity infrastructure firm Theo and former CIO at Credit Suisse. He noted that when futures trading resumes, prices typically align with movements that have already occurred on blockchain markets. "We are seeing weekend moves reflected when CME reopens," Ioppe added.
Explosive Growth in Tokenized Gold Sector
The dominance of onchain gold comes amid a period of rapid expansion for the sector. Over the past year, tokenized gold has added nearly $2.8 billion in value, with market capitalization growing from approximately $1.6 billion to $4.4 billion. This represents a 177% rise in the sector's market cap, a growth rate that far outpaces the broader gold market and most major spot gold exchange-traded funds.
Adoption has accelerated alongside valuation. The number of tokenized gold holders has nearly tripled, with more than 115,000 new wallets entering the market. This influx represented roughly a quarter of all net inflows into the real-world asset (RWA) sector, exceeding the combined expansion of tokenized stocks, corporate bonds, and non-US Treasurys. In terms of trading volume, the sector recorded approximately $178 billion in 2025, peaking at over $126 billion in the fourth quarter. At this level, tokenized gold stands as the second-largest gold investment product globally by trading volume, trailing only SPDR Gold Shares.
The surge in activity is driven by a diverse mix of participants. Market makers and cross-venue liquidity providers dominate participation, actively arbitraging price differences between digital and traditional markets. However, crypto-native macro traders also play a major role, utilizing tokenized gold not merely for exposure to bullion prices but for collateral, hedging, and yield strategies during periods of geopolitical or macroeconomic uncertainty.
Geopolitical Shocks and Institutional Monitoring
The practical utility of tokenized gold was tested during a recent escalation in geopolitical tensions following US and Israeli strikes on Iran. While Bitcoin and Ether fell during the event, tokenized gold rallied, with XAUT briefly climbing above $5,450 and PAXG nearing $5,536. This demonstrates the asset's function as a risk management tool when traditional markets are closed and unable to absorb shocks.
Some institutions are already monitoring weekend onchain gold markets, particularly macro and cross-asset desks tracking gap risk ahead of the CME reopen. However, Ioppe noted that most institutions treat the signal as informational rather than a basis for active positioning. The primary advantage remains the ability for participants to immediately rebalance positions during crises, a capability absent when futures markets are shut.
Despite the momentum, adoption faces hurdles. Liquidity remains smaller than in futures or ETFs, making large trades difficult to execute without impacting prices. Furthermore, regulatory clarity is improving but fragmentation across jurisdictions continues to slow institutional deployment. Issues regarding custody, accounting, and capital rules still vary widely. For the foreseeable future, tokenized gold is expected to operate alongside traditional products rather than replace them. The most likely near-term evolution, according to Ioppe, is that tokenized and traditional markets will exist in parallel, each serving a distinct function in the global financial ecosystem.
Source: CoinTelegraph | Analysis by Rumour Team