As the trend of dollar depreciation has become increasingly evident in recent years, especially in April 2025 when the dollar fell over 4.5% against other major currencies, marking the largest single-month decline in nearly three years, global investors began to reassess capital allocation. Especially in the crypto market, many people choose to hold funds in stablecoins (such as USDT, USDC) while waiting for clearer market direction. However, although stablecoins are pegged to the dollar, their actual purchasing power can be eroded when the dollar itself depreciates.
In this environment, what investors need is not just 'stability' but also assets that have 'inflation resistance and value preservation' capabilities. This is precisely the unique value of Paxos Gold (PAXG) in the crypto market.
What is $PAXG ?
PAXG (Paxos Gold) is a crypto asset issued by the regulated Paxos company in the United States, where each PAXG token is backed by 1 ounce of physical gold stored in professional vaults in London. In short, PAXG is a digital representation of gold, combining the advantages of both.
Gold's inflation resistance and value stability: Gold has long been viewed as an asset that combats inflation and economic uncertainty.
Liquidity, transparency, and the convenience of decentralized trading of crypto assets: PAXG can be freely traded in the crypto market, enjoying all the advantages of digital assets.
Why is PAXG a smarter choice when the dollar weakens?
1. Avoid the risk of dollar depreciation
Although stablecoins like USDT are pegged to the dollar, when the dollar weakens, the purchasing power of the stablecoins you hold will also decline. In contrast, PAXG is linked to gold, which has historically been seen as a safe haven against currency depreciation. When gold prices rise, the value of PAXG will also rise correspondingly, effectively hedging against the risks of a weak dollar.
2. Gold prices are rising, and PAXG still has potential
According to market analysis, by June 2025, the price of gold is expected to rise to $3,341 per ounce, showing strong performance. Some analytical institutions even predict that gold prices still have room for growth and may break through the $4,000 mark in the future. Therefore, as a representation of gold, PAXG's potential for value growth is also worth looking forward to. In the long run, the price trend of PAXG is likely to benefit from the growth of the gold market.
3. Wide application in the crypto market, strong liquidity
On mainstream exchanges like Binance, PAXG can not only be easily bought and sold but can also be used as collateral in some decentralized finance (DeFi) protocols to earn yields. Compared to traditional gold, PAXG offers significantly stronger liquidity and lower trading costs, making it especially suitable for active participants in the crypto market.
Who is suitable to hold PAXG?
1. Those holding large amounts of USDT and worried about dollar depreciation
For investors looking to avoid the risk of dollar depreciation, PAXG offers a more inflation-resistant alternative.
2. Those seeking relatively safe assets during market fluctuations
In the highly volatile crypto market, PAXG provides investors with a relatively stable asset, especially suitable for preserving value during uncertain market periods.
3. Those who are optimistic about gold in the long term but find it inconvenient to hold physical gold bars
For those optimistic about the growth of gold value but find it inconvenient to hold physical gold directly due to logistics, storage, or security reasons, PAXG is a very convenient and efficient choice.
Risk Warning: PAXG is not risk-free
Although PAXG is backed by physical gold and issued by a regulated entity, there are still certain risks associated with its investment. Investors should fully understand the following potential risks:
Gold price volatility: Gold prices are influenced by various factors, such as the global economic situation, geopolitical risks, etc. A drop in gold prices will directly impact the value of PAXG.
Platform and regulatory risks: The trading and storage of PAXG depend on exchange and wallet providers. Investors need to pay attention to the security of platforms and changes in regulatory policies in different countries. For example, stricter regulations on crypto assets in the U.S. and other countries may affect the liquidity and market environment of PAXG.
Liquidity and trading costs: In some trading scenarios, buying and selling PAXG may face slippage issues or high trading costs, especially in low liquidity markets, which may affect the efficiency of short-term trading.
In the context of gradual dollar depreciation, holding crypto tokens linked to physical gold, such as PAXG, may be an effective means to hedge against currency risk. By transferring funds to gold-backed digital assets, investors can enjoy the liquidity and convenience of the crypto market while avoiding risks associated with dollar depreciation. Whether combating inflation or seeking asset preservation, PAXG provides investors with a more robust investment option.
However, like any investment, PAXG is not without risk. Before deciding whether to invest, investors should conduct thorough assessments based on their own risk tolerance and consider asset diversification to avoid potential losses from singular asset exposure.
