This is the year when nation-states and central banks will jump on the Bitcoin (BTC) bandwagon, according to asset manager Fidelity Digital Assets.
Fidelity Digital Assets wrote in a recent research report that the very highest echelons of traditional finance will soon adopt Bitcoin, according to a report by industry news outlet Coindesk. The report quoted analyst Matt Hogan saying:
“We anticipate more nation-states, central banks, sovereign wealth funds, and government treasuries will look to establish strategic positions in Bitcoin.”
The details
The report cited currency debasement, rising inflation, and surging fiscal deficits as macro factors favoring Bitcoin allocations. According to the document, not making such an investment could be more risky than making it.
Republican President-Elect Donald Trump and Senator Cynthia Lummis have both supported a proposal to create a strategic Bitcoin reserve in the United States. While many criticized the idea, the plan moved forward, and draft legislation proposes partly financing the acquisition of Bitcoin by revaluing gold certificates held by the Federal Reserve System.
Lummis further proposed the “Bitcoin Act of 2024” to the Senate in July — establishing the reserve. Fidelity’s report claims that if the bill passes “political and financial game theory at play will force other nations to follow suit.”
If other nations were to also start accumulating Bitcoin, it is likely that the would do it suddenly to avoid being front-run by others who would drive the price higher before their acquisition, per the report. The report mentions that the top government Bitcoin holders are the U.S., China, U.K., Ukraine, Bhutan, and El Salvador.
The United States acquired much of its Bitcoin through seizures, such as the $6.5 billion worth of Bitcoin seized from the world’s first darknet black market Silk Road. According to recent reports, Chief U.S. District Judge Richard Seeborg just denied a motion that would prevent the forfeiture of 69,370 BTC from the Silk Road deep web black market.
