- A report published by Deutsche Bank Research Institute suggests Bitcoin is following a similar path to that taken by gold over the past 100 years, resulting in increased adoption and reduced volatility.
- The report’s authors believe Bitcoin’s increasing adoption and falling volatility will continue and the OG crypto will eventually be seen almost universally as an important store of value.
- The report also concluded that it’s possible Bitcoin will become a reserve asset by 2030, held by national reserve banks as a complement to gold.
Deutsche Bank Research Institute thinks Bitcoin is following a similar long-term trajectory to that of gold and may be headed toward becoming an attractive reserve asset for national governments by 2030, a research report published September 22 shows.
In the report, titled ‘Bitcoin vs Gold: The Future of Central Bank Reserves by 2030,’ Deutsche Bank’s analysts argue the OG cryptocurrency is becoming less volatile as adoption increases and regulation rolls out, in many ways mirroring gold’s adoption curve over the past 100 years.
“As history has shown, during the early stages of its adoption gold was also prone to price sensitivity, and gold’s volatility has declined over time,” the report’s authors said.
History appears to be repeating itself. Like Bitcoin, gold was once subject to skepticism, suspicion, and demand speculation.
Deutsche Bank Research Institute, ‘Bitcoin vs Gold’ report
Bitcoin’s increasing integration into the mainstream economy through ETFs and a wave of corporate accumulation, coupled with growing digital asset regulation in influential jurisdictions like the US and UK, has seen it mature as an asset. According to Deutsche Bank’s analysts, these trends are likely to see Bitcoin’s volatility continue to decline — indeed, the analysts noted that in August, Bitcoin’s 30-day volatility hit historic lows while its price hit new all-time highs.
“This combination suggests we may be witnessing the start of a gradual decoupling between Bitcoin’s spot prices and volatility as the crypto’s integration into portfolios is maturing,” the Deutsche analysts said.
If this trend continues — and the report’s authors believe it will — it could result in Bitcoin being widely adopted by the general public as a store of value asset in the same category as gold.
We believe that Bitcoin adoption will continue, as regulatory developments, macroeconomic conditions and — above all — time should enable the public to increasingly adopt Bitcoin as a store of value.
Deutsche Bank Research Institute, ‘Bitcoin vs Gold’ report
Related: Standard Chartered and Deutsche Bank Eye US Crypto Comeback Amid Regulatory Shift
Governments Could See Bitcoin as Reserve Asset by 2030, Says Deutsche Bank
Deutsche Bank’s analysts concluded that Bitcoin could become a complementary reserve asset by as soon as 2030, meaning it would be held alongside gold by national reserve banks.
There is room for both gold and Bitcoin to coexist on central bank balance sheets by 2030.
Deutsche Bank Research Institute, ‘Bitcoin vs Gold’ report
In assessing Bitcoin as a possible reserve asset candidate, the report authors found that it has many characteristics in common with gold, which make it a good candidate, including limited supply and independence from governments. And that BTC has some advantages over gold, such as improved portability and accessibility.
On the negative side, the report points to Bitcoin’s continued volatility, vulnerability to cyber attacks, and relatively low liquidity compared to assets like gold. Plus, the widespread view that it has no inherent value and is therefore purely speculative is also a reason it may not become a reserve asset.
Related: Countries Queue for Bitcoin as S&P 500 Slams Door on Corporate Crypto
In the end though, Deutsche Bank highlights the history of money and psychology to solidify their belief that Bitcoin will soon be adopted as a reserve asset to complement gold:
The history of financial markets suggests that human nature leads to a desire to break away from traditional assets. The US led adoption of Bitcoin can facilitate a longer-term whereby Bitcoin and other cryptocurrencies evolve from a speculative investment to a legitimised key component of global finance.
Deutsche Bank Research Institute, ‘Bitcoin vs Gold’ report
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