Bitcoin BTC$113,027.14 is poised to become a recognized reserve asset alongside gold in the next decade, according to a report from German bank Deutsche Bank (DBK) released on Monday. Despite this, gold is expected to maintain its lead in official reserves for the time being.
The report highlighted that the U.S. dollar still accounts for 57% of global reserves, but there are indications of a shift towards diversification. China reduced its U.S. Treasury holdings by $57 billion in 2024, and there is growing momentum for cryptocurrency regulation in major markets.
Deutsche Bank contends that bitcoin and gold will continue to coexist as complementary hedges against inflation and geopolitical risks due to their scarcity and low correlation with other assets.
Gold reached a record high of $3,763 on Monday and has seen an increase of over 40% year-to-date.
A significant development noted by the bank’s analysts is the decreasing volatility of bitcoin – a longstanding barrier to achieving reserve status. In August, its 30-day volatility hit historic lows even as prices surged above $123,500, indicating that the cryptocurrency may be moving away from its speculative past.
The bank stated that neither bitcoin nor gold are likely to replace the dollar as governments will take steps to safeguard their monetary sovereignty.
Deutsche Bank envisions bitcoin’s adoption mirroring that of gold – transitioning from skepticism towards widespread acceptance through regulation, macroeconomic trends, and time.
With investors increasingly exploring alternatives to traditional assets, bitcoin could transition from being viewed as a speculative investment into becoming an integral component of the global financial system according to the report’s analysis.
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