Crypto Whale Leverages DeFi Strategy to Amass $38M in Tokenized Gold Amid Market Cooling

• How Did a Crypto Whale Build a $38M Tokenized Gold Position?
• What Is Looped Borrowing in DeFi?
• Why Tokenized Gold Amid a Price Pullback?
• How Are Other Precious Metals Performing?
• FAQs: Decoding the Whale’s Move

A crypto whale has executed a sophisticated five-year Leveraged DeFi strategy to accumulate $38.4 million in tokenized gold (XAUt), even as gold prices show signs of cooling after recent record highs. Using looped borrowing on Aave, the whale (address 0x8522) swapped stablecoin loans for XAUt, showcasing the growing intersection of decentralized finance and traditional safe-haven assets. Meanwhile, global gold markets dipped slightly, with silver and platinum also retreating from highs. Here’s the full breakdown of this bold move and its implications.

How Did a Crypto Whale Build a $38M Tokenized Gold Position?

Over the past 20 days, the whale leveraged Aave’s borrowing protocol to repeatedly take out USDe stablecoin loans, converting them into XAUt—a gold-backed token pegged 1:1 to physical gold. Each transaction followed a pattern: borrow $11,600 in USDe, swap for ~2.51 XAUt, and repeat. In total, the address borrowed $18.3 million from Aave, routed through CoW Swap, to amass 8,337 XAUt. This strategy, known as "looped borrowing," amplifies exposure by recycling collateral—akin to using a mortgage to buy a house, then using that house as collateral for another loan.

What Is Looped Borrowing in DeFi?

Looping is a high-risk, high-reward tactic where users deposit collateral (e.g., ETH), borrow against it (up to 75% of its value), then redeposit the borrowed amount to borrow again. One ETH could morph into 1.75 ETH exposure after a single loop. While profitable during 2020’s yield farming boom, looping risks liquidation if asset prices swing violently. Platforms like Aave, Morpho, and Spark now see heavy looping activity—Morpho reports most of its volume comes from loopers.

Why Tokenized Gold Amid a Price Pullback?

The whale’s accumulation coincides with gold’s first consecutive daily losses this year. Spot gold dipped 0.1% to $4,610.86/oz on January 16, 2026, after hitting a record $4,642.72 earlier in the week. Analysts attribute the cooling to robust U.S. economic data (jobless claims fell to 198,000) and easing geopolitical tensions. "The gold rally lost steam this week," noted Julius Baer’s Carsten Menke. Yet, XAUt’s appeal persists—it combines gold’s stability with DeFi’s composability, allowing strategies like this whale’s leveraged bet.

How Are Other Precious Metals Performing?

Silver dropped 1.6% to $90.82/oz but still closed the week up 13%, while platinum fell 3.2% to $2,332.70. Retail gold demand softened in India due to record prices, though Chinese buyers paid premiums ahead of Lunar New Year. Interestingly, silver almost breached $100/oz before retreating—"The market seemed determined to hit that milestone," quipped Menke.

FAQs: Decoding the Whale’s Move

What’s the advantage of tokenized gold over physical gold?

Tokenized gold (like XAUt) offers 24/7 trading, fractional ownership, and integration with DeFi protocols—features physical gold can’t match. However, it introduces smart contract risks.

Could this strategy trigger a gold price surge?

Unlikely. $38M is a drop in the ocean for gold’s $14T market. But it signals growing institutional interest in crypto-gold hybrids.

Is looped borrowing safe?

Not for beginners. One price dip could liquidate the entire position. This whale likely has sophisticated risk management.