Deutsche Bank analysts now envision a future in which central banks may accumulate significant holdings of Bitcoin in tandem with gold by the end of the decade. Their research argues that Bitcoin’s falling volatility, greater liquidity, and growing institutional infrastructure make it plausible for sovereign treasuries to embrace it as a reserve asset.
According to the report, Bitcoin would not replace gold, but rather act as a complementary hedge in official reserve portfolios. The bank notes that gold will likely remain dominant in reserve allocations for some time, though the path for Bitcoin’s inclusion is becoming more credible.
The shift in sentiment is driven by several key observations:
- •Declining short-term volatility: Bitcoin’s 30-day volatility fell to multiyear lows even as its price pushed into record territory—signaling a maturation of market behavior.
- •Stronger market depth & infrastructure: Institutional custody, clearer regulation, and better liquidity are reducing the frictions that once made Bitcoin unsuitable for sovereign reserves.
- •Diversification trends: With inflation pressures, geopolitical risk, and questioning of fiat dominance, central banks may seek more diversified assets beyond just gold and foreign currencies.
The bank is careful to stress that Bitcoin is unlikely to displace the U.S. dollar as the backbone of global reserves; rather, sovereign actors may use it selectively to protect against inflation, sanction risks or currency debasement.