As risk assets including cryptocurrencies struggled on Thursday amid tariff uncertainties, tokenized gold once again emerged as an outperformer in the carnage.

The market capitalization of gold-backed tokens swelled to just under $2 billion on Wednesday, up 5.7% over the past 24 hours, according to CoinGecko data. The rise coincided with the yellow metal briefly touching a fresh all-time above $3,170/oz, TradingView shows.

Alongside the price rally, gold tokens experienced a frenzy of activity and demand over the past weeks, fueled by the broader market turmoil. Weekly tokenized gold trading volume surpassed $1 billion, the highest since the U.S. banking turmoil of March 2023, according to a report by digital asset platform CEX.IO.

The two largest tokens, Paxos Gold (PAXG), Tether Gold (XAUT), making up the bulk of the tokenized gold market, saw their weekly trading volumes surging over 900% and 300%, respectively, since January 20, according to the report citing CoinGecko data. PAXG also experienced continuous inflows totalling $63 million during this period, DefiLlama data shows.

The rally tracks the broader gains in physical gold, which posted double-digit increases in 2025 amid geopolitical uncertainty and inflation concerns. However, even gold wasn’t spared during the market-wide sell-off triggered by U.S. tariffs, with prices briefly dropping 6% before quickly recovering to record highs.

Since Trump’s inauguration, tokenized gold has been one of crypto’s top performing sectors, with its market cap up 21%, the report noted. By contrast, stablecoins gained a more modest 8% in market cap, while bitcoin declined 19% and the total crypto market lost 26%.

“Tokenized gold is emerging as one of the key diversification strategies among crypto-native users, alongside bitcoin,” wrote Alexandr Kerya, VP of product management at CEX.IO. “It provides a safer and more stable approach to portfolio management, enabling users to stay within the crypto ecosystem while benefiting from the value and stability of the underlying physical asset.”

“At the same time, the broader RWA narrative helps make gold exposure more accessible and intuitive for users who may not have considered it before,” Kerya added.

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Tariffs and trade tensions could ultimately be positive for bitcoin (BTC) adoption in the medium term, asset manager Grayscale said in a research report Wednesday.

Higher tariffs result in stagflation— stagnant economic growth coupled with inflation — which is negative for traditional assets, but positive for scarce commodities such as gold, the report said.

Bitcoin is considered hard money, akin to digital gold, and is viewed as a modern store of value, the report noted.

Cryptocurrencies surged on Wednesday following President Donald Trump’s announcement of a 90-day pause on tariffs for countries that haven’t retaliated against the U.S.

“Trade tensions may put pressure on reserve demand for the U.S. Dollar, opening space for competing assets, including other fiat currencies, gold, and bitcoin,” Grayscale said.

Historical precedent suggests that dollar weakness and above-average inflation may persist, and bitcoin is likely to benefit from such a macro backdrop, the asset manager said.

“A rapidly improving market structure, supported by U.S. government policy changes” could help broaden bitcoin’s investor base, the report added.

Read more: Trump Administration Wants Weaker Dollar and That’s Positive for Bitcoin: Bitwise

As of Wednesday morning, the yield on the UK’s 30-year government bond soared to 5.5%—its highest level since 1998—mirroring a broader climb in U.S. sovereign yields and sparking fresh concerns about financial market stability.

Surging global bond yields are exerting significant downward pressure on risk assets. Since the U.S. equity sell-off began last Thursday, the Nasdaq has dropped 10%, while bitcoin (BTC) has fared slightly better, down 8% over the same period.

In the same time the U.K. 30-year bond yield is up 8%, while the U.S. 30-year is up 12%. Charlie Morris, founder of ByteTree, believes investors will start to seek diversification into other assets including bitcoin.

“It appears that the UK has been living beyond its means for too long. It hasn’t balanced its budget since 2001, the gilt market has had enough”, Morris said. “Investors seeking diversification away from financial assets will not only buy gold, but bitcoin too”.

The dramatic spike in yields has revived unsettling memories of the UK’s 2022 pension crisis, when a sudden surge in borrowing costs triggered a near-collapse of the financial system and ultimately cost then-Prime Minister Liz Truss her job.

This latest bond market turmoil is being driven by escalating uncertainty around global trade, stoked by President Donald Trump’s proposed tariff plans. These levies could disrupt global supply chains and increase costs, adding pressure to already jittery markets.

“Alas, in politics you never get what you want by making civil arguments from high principle,” former UK MP Steve Baker told CoinDesk in an exclusive interview. “President Trump said he was using brute economic force—and he is. It’s time to rediscover free trade at home and abroad, fast, before this chaos wrecks our futures.”

The recent yield surge echoes the events of 2022, when a surprise mini-budget announcement on Sept. 23 sent gilt yields soaring, crashed the pound, and exposed deep vulnerabilities in the UK pension system.

Many defined benefit pension schemes had adopted complex liability-driven investment (LDI) strategies, using leverage and derivatives to match long-term liabilities. But as yields spiked, these funds suffered massive mark-to-market losses and faced margin calls, forcing rapid gilt sales into a thin market and creating a destabilizing “fire sale” feedback loop.

At the time, UK pension funds held around 28% of the gilt market. The ensuing chaos, occurring in a modest $1.5 trillion market, was so severe that it required the Bank of England to step in with emergency gilt purchases to halt the downward spiral. A Chicago Fed Letter analyzing the crisis later identified excessive leverage, asset pooling, and the limited depth of the gilt market as key structural weaknesses—particularly in contrast to the much larger $9.9 trillion U.S. Treasury market.