Metal Season 2025: Why Gold‑Backed Crypto Outperformed Bitcoin and What It Means for Allocators

Executive thesis: a metal season, not necessarily the end of Bitcoin

In 2025 the market experienced what many participants called a metal season — a stretch where gold‑ and silver‑linked crypto products materially outperformed Bitcoin. Tokenized bullion like XAUT and PAXG, and derivatives tied to precious metals, attracted capital flowing from both traditional safe‑haven buyers and crypto native investors. That shift amplified the digital gold debate: does Bitcoin still deserve the store‑of‑value mantle when gold‑backed tokens suddenly delivered competing performance and liquidity? For wealth managers weighing inflation and store‑of‑value mandates, the question is less rhetorical and more about tangible allocation choices.

Performance snapshot and market flows

Quantifying 2025’s metal season depends on which instruments you compare — spot BTC, perpetual futures, tokenized gold spot tokens (XAUT/PAXG) or structured derivatives on gold and silver. Multiple reports and market commentators found that tokenized metals and crypto derivatives tied to bullion outpaced BTC in late 2025, driven by fresh inflows and a relative tightening of BTC price action. Sources documenting these flows include industry coverage that linked surging demand for gold‑backed tokens to underperformance in BTC’s rally windows (Benzinga and Coinpaper). BeinCrypto framed the phenomenon as a broader metals outperformance narrative, or a ‘metal season,’ versus other commodities and BTC alike (BeinCrypto).

On the execution side, two flow patterns were visible:

• Classic safe‑haven capital: traditional allocators and high‑net‑worth investors increasing direct gold exposure via tokenized vehicles that offer custody convenience and on‑chain settlement. Benzinga notes that gold‑derivative tokens (Tether Gold analogue tokens, PAXG) saw renewed interest.
• Crypto native rotation: traders moving stablecoin liquidity into XAUT/PAXG pools and metal‑backed token markets, reducing demand for leveraged BTC derivatives and compressing BTC volatility.

These cross‑market flows were consistent with reports of whales and large traders repositioning capital into metals as BTC consolidated in tight ranges. That capital movement translated into tighter spreads and deeper liquidity for tokenized metal markets, reinforcing their attractiveness.

Why did metal season happen? The macro and narrative drivers

Several macro drivers converged to make precious metals — and their tokenized counterparts — the go‑to for risk‑off and inflation hedging in 2025.

1) Real rates and policy expectations

When real yields fall, the opportunity cost of holding non‑yielding assets like gold drops, making bullion more attractive. In parts of 2025, markets priced in slower rate normalization and periodic liquidity infusions that lowered real rates, favoring gold and silver. That dynamic pushed money into physical and tokenized metal exposures.

2) The money‑printing narrative and precautionary demand

Public discourse and some market commentators emphasized renewed fiscal stimulus and central bank balance‑sheet support in parts of 2025 — what many called a ‘money printing’ narrative. That narrative boosted precautionary demand for tangible stores of value. Tokenized metals, which give faster access and settlement than physical metal for crypto allocators, benefited directly.

3) Macro liquidity and cross‑asset positioning

Macro liquidity conditions—central bank liquidity windows, repo operations, and cross‑border capital flows—moved in ways that supported metal prices. At the same time, BTC’s role as a high‑beta crypto asset meant that in risk re‑pricing events some capital sought the lower volatility characteristics of gold and silver exposures, now available via XAUT/PAXG.

4) Product innovation and accessibility

Tokenization improved access: PAXG and XAUT allowed investors to obtain metal exposure without the logistics of vaulting, shipping, or traditional intermediaries. That lowered friction mattered for crypto allocators who could now park capital on‑chain while maintaining a metal‑backed claim.

On‑chain and derivatives evidence: what the data showed

On‑chain metrics and derivatives markets gave early clues of the rotation:

• Issuance and minting spikes: tokenized metal platforms recorded elevated minting activity during the months of outperformance, indicative of fresh inflows from stablecoins and onboarding rails.
• Stablecoin‑to‑token flows: traders shifted balances from major stablecoins into XAUT/PAXG pools on centralized and decentralized venues, tightening liquidity and improving market depth for metal tokens.
• BTC volatility and futures basis: while BTC traded in a narrow band for extended periods, futures funding and open interest metrics for BTC compressed, signaling reduced leverage appetite. That capital reallocation correlated with increased open interest and volumes in gold‑linked crypto derivatives reported by market commentators.

Journalistic and on‑chain reporting from Coinpaper pointed to whale activity and reallocation into precious metals as BTC stalled, while Benzinga covered the surge in demand for gold‑linked crypto derivatives—both supportive of the thesis that flows, not just sentiment, drove the metal season. See the reporting for concrete trade anecdotes and market color (Coinpaper, Benzinga).

What this means for the digital gold debate

The metal season reopened an old argument: is BTC the new gold? The events of 2025 make that a more nuanced debate.

• Challenge to the simple narrative: Gold‑backed tokens blunt a key selling point for BTC — portability plus scarcity — by offering a crypto‑native claim on a historically proven store of value. For investors prioritizing capital preservation and lower realized volatility, XAUT/PAXG became compelling alternatives.
• BTC’s durable advantages: Bitcoin still offers unique properties — fixed supply protocol, censorship resistance, wide exchange liquidity, and deep derivatives markets — that are unmatched by tokenized metals. Institutional custody solutions for BTC matured further in 2025, and for long‑term allocators the asset remains a distinct risk asset rather than a pure commodity proxy.

The takeaway: metal‑backed crypto tokens did not prove BTC worthless as ‘digital gold,’ but they did reclaim the practical store‑of‑value use case for investors seeking lower variance and explicit linkage to physical metal. The debate shifts from binary (“which is gold?”) to functional: which instrument best serves a given mandate?

Structural shift or cyclical rotation? A balanced reading

Is metal season a lasting structural change or a cyclical rotation? The evidence leans toward a durable cyclical rotation with structural implications:

• Cyclical case: If 2025’s drivers — lower real rates, an episodic money‑printing narrative, and transient liquidity windows — reverse, capital can and likely will rotate back into BTC and other risk assets. Crypto markets are still prone to sentiment‑driven swings and leverage flows that can flip quickly.
• Structural case: Tokenization changed the plumbing. Gold‑backed tokens permanently lowered the friction for on‑chain metal exposure, attracting a cohort of investors who previously would have chosen either physical metal or cash. That infrastructural change means tokenized metals are no longer a transient novelty; they are a persistent option in the allocator’s toolkit.

So, metal season reads as a cyclical rotation that has created a structural wedge — tokenized metals now occupy a lasting role that can amplify future rotations depending on macro regimes.

Investment frameworks for allocators: practical rules of thumb

For wealth managers and crypto allocators, choosing between BTC, tokenized metal (XAUT/PAXG), and physical metal requires a framework that blends client objectives, liquidity needs, and operational constraints.

Step 1 — Clarify mandate and timeframe

• Inflation hedge vs. returns target: Is the client seeking a pure inflation hedge or portfolio diversification? If the mandate is capital preservation over decades, physical bullion should be central. If the client needs crypto‑native, on‑chain hedges with easier settlement, PAXG/XAUT are attractive.
• Time horizon: Shorter horizons favor tokenized metals for liquidity; longer horizons favor a mix including physical custody.

Step 2 — Understand counterparty and custody risk

• XAUT/PAXG carry issuer and custodian risk and require proof of reserves and transparent attestations. Evaluate audit cadence, redemption mechanics, and legal recourse.
• Physical metal requires secure vaulting and insurance; it can be illiquid relative to tokenized counterparts for on‑chain traders.

Step 3 — Liquidity, costs, and tax considerations

• Trading costs: tokenized metals often have lower transaction costs for on‑chain traders, but there are mint/burn and spread considerations.
• Taxes: jurisdictional rules differ for derivatives, crypto tokens, and physical bullion; plan for realized gains and reporting frictions.

Step 4 — Suggested allocation templates (illustrative)

• Conservative STORE‑OF‑VALUE: 70% physical gold/silver, 20% PAXG/XAUT (tokenized metal for tactical liquidity), 10% BTC. Best for capital preservation mandates.
• Balanced DIVERSIFIER: 40% BTC, 30% PAXG/XAUT, 30% physical metal. Appropriate for clients seeking both upside exposure and inflation protection.
• Growth‑oriented ALLOCATOR: 60% BTC, 20% PAXG/XAUT, 20% physical metal. For investors who accept BTC volatility for higher expected returns but want some metal hedge.

Adjust allocations with dynamic overlays: increase tokenized metal weight when real rates fall and macro liquidity is expanding, and trim during pronounced deflationary or risk‑on cycles.

Step 5 — Execution and monitoring

• Use staggered entry: dollar‑cost average into both BTC and metal tokens to avoid timing risk.
• Monitor on‑chain metrics: minting activity, token circulation, funding rates, and futures open interest to sense flow shifts.
• Rebalance to mandate triggers: predefine macro or volatility triggers to rebalance between BTC and metal exposures.

Implementation considerations and next steps for allocators

Operational checks are often the deciding factor:

• Due diligence on issuers: vet PAXG/XAUT issuers, custody providers, and audit reports.
• Redemption mechanics: know how to redeem tokens for physical metal and the lead times involved.
• Platform choices: some allocators use exchanges that list PAXG/XAUT, or custody providers with integrated mint/burn processes; Bitlet.app and other platforms offer various rails for earning or installing crypto exposures, but choose partners based on security and legal clarity.

Conclusion — coexistence, not conquest

Metal season 2025 demonstrated that tokenized gold and silver can usurp short‑term flows from BTC and offer a compelling store‑of‑value play in certain macro regimes. However, the event is best read as a cyclical rotation enabled by structural innovation: tokenization lowered barriers and made metals a permanent, crypto‑native option. For wealth managers the practical move is not to pick a permanent winner, but to design robust allocation frameworks that incorporate both digital and physical stores of value, guided by mandate, horizon, and operational constraints.

Sources

• Metals Outperformed Bitcoin vs Copper — BeinCrypto
• Bitcoin Failed As Store Of Value In 2025 — Benzinga coverage of gold‑backed crypto demand
• Bitcoin Whales Buy Big As Gold And Silver Surge — Coinpaper

For more on asset narratives and tactical allocation in crypto, consider reading how Bitcoin contextually interacts with other store‑of‑value instruments and exploring cross‑market dynamics in DeFi ecosystems.