It's been a dismal year for the crypto market. Bitcoin (BTC 1.11%) is down 25% for the year, while Ethereum (ETH 0.96%) is down 36% (as of Feb. 19). With these two market bellwethers struggling to find their footing, almost no major cryptocurrencies are in the green.
But there is one sector of the crypto market that is booming right now: gold-backed stablecoins. The two leaders here are Tether Gold (XAUT 1.15%) and PAX Gold (PAXG 1.28%). Together, they account for 90% of the gold-backed stablecoin market. If you're looking to put $1,000 to work in the crypto market right now, this could be a good place to start.
Tether Gold or PAX Gold?
It can be tough making the choice between Tether Gold and PAX Gold. Both are pegged 1-to-1 to the price of physical gold, and both are up 15% for the year. Both now rank among the top 35 cryptocurrencies in the world, and both have market caps of roughly $2.5 billion.
Image source: Getty Images.
But PAX Gold has one clear advantage over Tether Gold: it is fully regulated by U.S. banking authorities, and is generally more accessible than Tether Gold for U.S. investors. For that reason, PAX Gold gets my vote over Tether Gold. For a total cost of $1,000, you can pick up about 0.2 tokens at today's prices.
Physical gold, Bitcoin, or tokenized gold?
A year ago, some investors touted Bitcoin as digital gold. It was presumed to be the one safe asset that you needed to have in your crypto portfolio. These enthusiasts considered it just as valuable and appealing as physical gold. But during the past 12 months, the prices of Bitcoin and physical gold have radically diverged, and that's leading investors to question the digital gold investment thesis.
CRYPTO: PAXG
Key Data Points
During the past 12 months, gold is up a head-spinning 71%, while Bitcoin has taken a serious hit in value. For that reason, money has now been flowing into gold-backed stablecoins. At the end of 2025, this was a $4 billion market opportunity. Just two months into 2026, it's now a $5 billion market opportunity. As long as the price of gold continues to climb, so will the demand for gold-backed stablecoins.
Investors now have several different ways to get their gold exposure. They can buy physical gold bars. They can invest in gold exchange-traded funds (ETFs). And now they can invest in tokenized gold in the form of stablecoins.
Investors in PAX Gold can exchange their tokens at any time for physical gold, just as owners of dollar-pegged stablecoins can exchange their tokens for physical dollars at any time. Think of it as owning the right to pick up physical gold at any time, without all the worries of actually owning physical gold bars.
At a time when nearly all major cryptocurrencies are trending down, there are few safe spots to park your money in the crypto market right now. That's why I'm keeping my eye on tokenized gold as a potential investment opportunity in 2026.
