Gold-Backed Cryptocurrency Tops $75K Bitcoin for Gulf Funds

By Fatima Hassan

Gulf investors increasingly favor gold-backed cryptocurrency over Bitcoin. Oil volatility and Sharia compliance drive this shift. Alternative.me tracks the Crypto Fear & Greed Index at 33, signaling extreme caution on October 15, 2024.

Bitcoin trades at $75,619 USD, up 1.6% in 24 hours. Ethereum holds at $2,306 USD, up 1.2%. Saudi Arabia's Public Investment Fund (PIF) screens Sharia-aligned gold-backed assets amid market fear.

Oil Volatility Drives Gold-Backed Cryptocurrency Shift

GCC economies depend on Brent crude oil. Bloomberg reports Brent fell to $78.50 USD per barrel on October 10, 2024. This drop disrupts budgets for mega-projects like NEOM and The Line. Gold-backed cryptocurrency hedges via physical bullion backing.

Tokens like PAX Gold (PAXG) represent one troy ounce of gold in professional vaults. Paxos conducts monthly audits for transparency, per company disclosures. UAE's Mubadala Investment Company manages $284 billion USD in assets, per Sovereign Wealth Fund Institute (SWFI). Mubadala allocates to these for stability. Qatar Investment Authority (QIA) mirrors this strategy.

Bitcoin's proof-of-work mining raises environmental issues in Vision 2030's sustainability push. Gold-backed tokens run on Ethereum's proof-of-stake since the 2022 Merge. This aligns with Saudi Arabia's green goals.

Sharia Compliance Boosts Gold-Backed Cryptocurrency Appeal

Gold-backed cryptocurrency avoids riba (interest) and gharar (uncertainty). It meets AAOIFI standards, approved by Islamic scholars. UAE's DFSA and Bahrain's Central Bank license these for retail and institutions.

CoinDesk explains the mechanics: smart contracts link tokens to audited gold reserves. PIF screens cryptocurrency portfolios rigorously for Sharia fit. Dubai's VARA issued licenses to gold token providers since 2023.

Saudi Arabia's SAMA pilots blockchain-based sukuk. This integrates gold-backed cryptocurrency into the $4.5 trillion USD global Islamic finance market, per Refinitiv's 2023 report.

• Asset: Bitcoin (BTC) · Price (USD): 75,619 · 24h Change: +1.6%
• Asset: Ethereum (ETH) · Price (USD): 2,306 · 24h Change: +1.2%
• Asset: XRP · Price (USD): 1.42 · 24h Change: +0.8%
• Asset: BNB · Price (USD): 629.21 · 24h Change: +1.3%
• Asset: PAX Gold (PAXG) · Price (USD): 2,650 · 24h Change: +0.4%

Bitcoin gains modestly amid fear. Gold-backed cryptocurrency dodges sharp swings.

Technology Fuels Gulf Adoption of Gold-Backed Cryptocurrency

Blockchain oracles like Chainlink feed real-time gold spot prices into smart contracts. Dubai's DIFC fintech hubs test Islamic banking apps with tokenized gold. Abu Dhabi Investment Authority (ADIA) manages $993 billion USD, per SWFI. ADIA tests gold-backed collateral for DeFi.

Reuters reports regulatory advances in Islamic finance and crypto tokens as of October 2023. Family offices exit Bitcoin at $75,619 USD after its $69,000 USD peak.

Ethereum powers DeFi yields on gold reserves. Sovereign funds seek 8% annualized returns. Gold staking protocols deliver 5-7% yields. These draw conservative capital from GCC portfolios.

Key Risks in Gold-Backed Cryptocurrency Investments

Custody demands quarterly audits and SOC 2 compliance. Liquidity trails Bitcoin's $1.5 trillion USD market cap. Tether Gold (XAUT) spreads exceed USDT's $1.00 USD peg.

Oil recovery above $85 USD per barrel may shift flows to equities. Fear & Greed Index above 50 signals Bitcoin rallies, per Alternative.me. OPEC+ quotas risk softening demand through 2026.

UAE holds $1.4 trillion USD in sovereign assets, per SWFI. These funds diversify via gold-backed cryptocurrency. An index above 50 tests these allocations as markets recover.