Crypto analyst and economist Alex Krüger says the world’s major central banks will inevitably go on to hold Bitcoin as a reserve asset.
In a tweetstorm, Krüger looks at the central banks’ demand for gold.
“I’ve changed my mind. Major central banks will eventually hold Bitcoin as a reserve asset. Central bank’s gold demand has averaged $23.4 billion per year for the last ten years.”
According to Krüger’s chart, central banks’ demand for gold skyrocketed from $3.1 billion in 2010 to as high as $30.5 billion in 2012 before steadily declining to $16.7 billion in 2020. The economist also notes that the loose monetary policies of central banks drove the prices of the precious metal higher.
“Central bankers must not have taken the macro class where you learn that injecting liquidity and turning real rates negative makes the price of gold spike.”
With a clear picture of the appetite for gold, Krüger uses the figures to illustrate central banks’ possible demand for Bitcoin.
“Assume now in five years, central banks’ demand for bitcoin stands at 5% of their gold demand. That would generate $1.2 billion in additional bitcoin buying pressure. $1.2 billion may not sound as much. Grayscale for example has added approximately $1.6 billion in December 2020 alone.”
The economist says that $1.2 billion is just the start. He expects the number to go up after the first central bank buys BTC as a reserve asset.
“One could assume that % would go up in time, against Bitcoin’s decreasing supply, while gold’s supply is rather constant through time. Price should spike sharply when the first major central bank jumps in, both for signaling reasons and because speculators try to front-run flows.”
Follow us on X, Facebook and TelegramDon't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
Check Price Action
Surf The Daily Hodl Mix
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/Larina Marina
