Crypto Whale Leverages DeFi Strategy to Amass $38M in Tokenized Gold Amid Market Cooling
- How Did the Whale Build a $38M Gold Position Using DeFi?
- Why Tokenized Gold Now? Market Context
- The Mechanics of Looping: Risks and Rewards
- Silver and Platinum: Precious Metals Roundup
- FAQs: Crypto Whales and Tokenized Gold
A savvy crypto whale has deployed a five-year-old Leveraged DeFi strategy to accumulate $38.4 million in tokenized gold (XAUt) over the past 20 days, even as bullion prices show signs of retreat from recent highs. Using looped borrowing on Aave, the whale capitalized on stablecoin collateral to build this massive position—showcasing the high-stakes game of decentralized finance. Meanwhile, global gold markets dipped slightly, but analysts note underlying strength ahead of Lunar New Year demand. Here’s the full breakdown.
How Did the Whale Build a $38M Gold Position Using DeFi?
According to blockchain analytics firm Lookonchain, wallet addressborrowed $18.3 million in USDe stablecoins from Aave, then swapped them for 8,337 XAUt (tokenized gold by Tether) via CoW Swap. The whale executed atactic: depositing collateral, borrowing against it, and repeating the process to amplify exposure. For context, depositing 1 ETH could yield 1.75 ETH in supply and 0.75 ETH in debt after one loop—multiply that across dozens of cycles, and you’ve got serious leverage (and risk).
“This isn’t new—looping blew up during DeFi Summer 2020,” notes the BTCC research team. “But seeing it applied to gold tokens at this scale? That’s a bold bet on crypto’s safe-haven narrative.”
Why Tokenized Gold Now? Market Context
The buying spree comes as spot gold prices slipped 0.1% to $4,610.86/oz on January 16, 2026, after hitting a record $4,642.72 earlier in the week (per TradingView data). Despite the pullback, gold remains up ~2% weekly, with analysts citing:
- U.S. dollar strength: DXY neared six-week highs, making gold pricier for foreign buyers.
- Economic data: Unexpectedly low U.S. jobless claims (198K vs. forecasts) reduced Fed rate-cut hopes.
- Geopolitical calm: Protests in Iran eased, trimming immediate safe-haven demand.
“Gold’s momentum stalled, but the structural case isn’t broken,” says Carsten Menke of Julius Baer. In Asia, physical demand held steady—Chinese premiums persisted ahead of Lunar New Year, while Indian buyers hesitated at record prices.
The Mechanics of Looping: Risks and Rewards
Looping works like this on Aave:
- Deposit collateral (e.g., USDC).
- Borrow up to 75% of its value in stablecoins (like USDe).
- Re-deposit borrowed funds as new collateral.
- Repeat until desired exposure is reached.
But beware: if XAUt prices drop ~15%, the whale’s position could face liquidation. “Morpho and Spark see heavy looping activity too,” adds BTCC’s analyst. “It’s a double-edged sword—bigger gains, bigger risks.”
Silver and Platinum: Precious Metals Roundup
While gold dominated headlines:
- Silver: Fell 1.6% to $90.82/oz but still up 13% weekly—nearing the psychological $100 barrier.
- Platinum: Dropped 3.2% to $2,332.70/oz.
- Paladium: Slid 2.6% to $1,754.35/oz, heading for a weekly loss.
Menke quipped, “Silver’s rally looked unstoppable until gravity kicked in.”
FAQs: Crypto Whales and Tokenized Gold
What is tokenized gold (XAUt)?
XAUt is Tether’s gold-backed token, where 1 XAUt = 1 troy ounce of physical gold stored in vaults.
How does looping work in DeFi?
Users repeatedly borrow against their collateral to multiply exposure—like trading on margin, but automated via smart contracts.
Why use DeFi for gold instead of ETFs?
DeFi offers 24/7 trading, no custody fees, and composability (e.g., using XAUt as collateral elsewhere).
Is this whale’s strategy risky?
Extremely. A 15% gold price drop could trigger liquidation, wiping out the position.
