## The Wave of Cryptocurrency: $1.5 Billion in Safe Haven or Just a Temporary Shift?

The crypto market is witnessing an interesting shift. While traditional assets like gold are benefiting from reduced risk appetite, digital gold has become a major destination for capital flows. According to data from Token Terminal, PAXG – a tokenized gold issued by Paxos – currently has approximately $1.5 billion in circulation. This figure has increased significantly compared to previous periods in 2023 and early 2024, reflecting growing investor interest.

It’s no coincidence that digital gold has suddenly gained attention. Investors are no longer just buying physical gold or through traditional ETFs. They are turning to blockchain-based versions. The reasons are clear: digital gold offers benefits that physical gold does not – easier access, flexible payments, and most importantly, 24/7 trading. These features become especially attractive during volatile market conditions.

## Bitcoin Falls Behind Gold: Valuation Story or Capital Outflow?

This is where Bitcoin (BTC) – currently trading at $90.78K – begins to face issues. While gold is performing well, Bitcoin is under pressure. The question many ask is: Is BTC truly weakening because investors are pulling out of crypto, or is it simply being "undervalued" compared to traditional safe assets?

An interesting indicator is the Bitcoin/gold ratio, which is often associated with market bottoms. Historically, whenever this ratio drops to this level, Bitcoin tends to recover strongly afterward – even when gold demand remains high. This suggests that Bitcoin’s slowdown may not be an absolute weakness, but rather a relative valuation gap.

## Conflicting Views from Experts

Renowned crypto analyst Michael Van de Poppe made a notable comment: *"One of the two is overvalued. One of the two is undervalued. In my view, gold is overvalued, while Bitcoin is undervalued."* This perspective indicates that current movements are likely just a temporary correction, not a long-term trend.

However, Matthew Kratter – a Bitcoin maximalist – views the issue differently. Instead of worrying about the short-term rally in gold, he focuses on long-term economic models. *"The supply of gold increases only about 1-2% annually over many decades, even centuries. The problem is that transporting and insuring large quantities of gold is very costly, so it’s not an efficient way to address trade imbalances."* This argument suggests that digital gold is only a temporary solution, and Bitcoin still holds fundamental advantages.

## No End in Sight: Gold vs Bitcoin – The Race Continues

Currently, digital gold dominates with strong price gains and reduced risk appetite. But is this truly a long-term change? Or just a phase in the ongoing race between traditional gold, digital gold, and Bitcoin?

Bitcoin advocates argue that the story of crypto as a store of value is still unfolding – just over a different timeframe. Unlike gold, Bitcoin has a more rigid supply structure, is less costly to store, and operates on a global 24/7 network.

The final answer likely depends on how each investor defines "safety" in a digital financial system. If safety equals traditional assets with verified backing, digital gold is the clear choice. But if safety equals a sustainable economic model and inflation resistance, Bitcoin still has reasons to hope.

**In summary:** The $1.5 billion capital flow into digital gold reflects investors’ search for safety, but history shows that the valuation gap between Bitcoin and gold often signals an upcoming recovery, not the end of crypto.