Deutsche Bank analysts believe Bitcoin will inevitably appear on many central bank balance sheets alongside gold.
The prediction comes in a new report, stating BTC will follow gold’s path as a hedge against inflation and geopolitical risks.
The report highlights Bitcoin’s growing legitimacy, deep liquidity, fixed supply of 21 million coins, low correlation to traditional assets, low transaction costs and extreme portability.
“Like gold, Bitcoin has a fixed supply (capped at 21mn). This creates disinflationary benefits, meaning that Bitcoin’s value tends to not erode compared to fiat currencies, which lose purchasing power over time due to inflation.
Another key feature of Bitcoin is its portability and accessibility. If one were to store either 0.001 BTC or 10,000,000 BTC, the cost would be the same: almost zero. This makes a Bitcoin reserve valuable during times of conflict compared to gold, as moving tonnes of gold out of an invaded country would be very difficult and costly. To put this into perspective, the Bank of England charges external central banks 3.5 pence per night for storing one gold bar, so the cost of storing 400,000 bars for a year would equal ~£5,110,000 in staff, security, maintenance and more.”
The bank says Bitcoin’s volatility remains a hurdle, although analysts expect it to mature like gold did decades ago, with neither asset threatening the US dollar’s dominance.
The report also notes the fact that crypto exchanges holding Bitcoin have repeatedly been hacked, although the Bitcoin network itself has never been cracked.
In the end, Deutsche Bank determines BTC is well on its way to becoming a key reserve asset.
“By 2030 we predict that Bitcoin will join gold in many central banks’ official reserve balance sheets…
Bitcoin and gold are complementary diversifications to central bank portfolios. As we have underlined, Bitcoin and gold are deemed complementary alternatives to traditional safe-haven reserves due to their low correlation with other asset classes, relatively scarce supply, and use as a hedge against inflation and geopolitical volatility.”
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