According to Cointelegraph: In a new paper titled The Case for Bitcoin as a Reserve Asset, the Bitcoin Policy Institute advocates for central banks to consider Bitcoin (BTC) as a viable reserve asset. Economist Matthew Ferranti, the paper's author, contends that Bitcoin could serve as a safeguard against inflation, geopolitical instability, capital control risks, and sovereign defaults. Given its weak correlation to other financial assets, Ferranti sees Bitcoin as a valuable portfolio diversifier, akin to gold, but without the counterparty risks associated with traditional assets.
Bitcoin as a Strategic Reserve: Politicians Weigh In
The idea of Bitcoin as a strategic reserve has also gained traction among U.S. lawmakers and political figures. Wyoming Senator Cynthia Lummis recently introduced the Bitcoin Strategic Reserve Bill, aiming for the U.S. Treasury to acquire up to 5% of Bitcoin’s total supply. Former President Donald Trump added to the conversation, suggesting that the government could address national debt with Bitcoin reserves, leveraging BTC's supply-capped nature to hedge against inflation and economic downturns.
Correlations between Bitcoin and other reserve assets. Source: Bitcoin Policy Institute.
Advocates and Critics of Bitcoin as a Reserve
MicroStrategy CEO Michael Saylor praised the initiative, likening it to the historic Louisiana Purchase that doubled the U.S.'s territory and economic potential in 1803. However, the concept isn’t universally supported; Cardano founder Charles Hoskinson expressed concerns that adopting Bitcoin as a reserve could allow governments to influence Bitcoin’s decentralized nature.
Current US national debt breakdown. Source: US Debt Clock.
Could Bitcoin Join Gold as a Reserve Standard?
While Ferranti acknowledges that Bitcoin may not suit every central bank’s portfolio, he argues that it holds a similar role to gold as a store of value and hedge against economic crises, especially for nations vulnerable to sanctions. As Bitcoin continues to mature, its use as a strategic reserve asset may redefine financial resilience and introduce a new paradigm in central banking.
