It might sound like a conspiracy, but central banks are almost certainly already buying Bitcoin. Hereâs why:
đ¸Hedging Against Their Own Policies
Nearly all countries are up to their ears in debt. Since austerity measures are not politically acceptable, they must find other ways to manage that debt â and the easiest path is just to inflate it away! If you make the value of each dollar of debt worth less and less each year, it naturally becomes easier to find the money to pay it off.
Hereâs where central banks come in, and the game plan is simple: flood the economy with money to purposely cause inflation. In the United States, the Fed supposedly targets a 2% inflation rate, but in reality, they want the inflation rate to be as high as possible without causing political turmoil.
Of course, central banks know all about inflation, which is why they try to minimize the amount of currency they hold in reserve. Instead, they opt for hard assets â ie. assets that donât get devalued year after year.
Gold is one such asset, and so are stocks, and even some kinds of bonds. Bitcoin is also an inflation-resistant asset, which is why central banks are probably scooping it up right now.
đ¸Bitcoin as a Hedge Against Uncertainty
The global economy is shaky, and as many investors turn to Bitcoin to hedge against financial instability, central banks are likely doing the same. Publicly, bankers may criticize Bitcoin, but privately they could be buying it to protect their reserves, particularly in countries seeking sanction-resistant assets. Bitcoinâs decentralized nature provides an escape from financial sanctions and offers a hedge against rising debts and inflation as trust in fiat currencies erodes. For central banks in geopolitically sensitive regions, accumulating Bitcoin could serve both as a safeguard against weakening traditional monetary systems and as a means to sidestep external pressures.
đ¸Preparing for the Future of Money
Even if central banks arenât buying Bitcoin yet, they may have no choice soon. Bitcoin is gaining traction. The Bitcoin ETF was the most successful in history, ballooning to over $50B in assets under management within weeks of launch. Now banks are lining up to find ways to get into the Bitcoin market. As more people and businesses turn to crypto, central banks will need to adapt quickly to avoid being left behind.
By holding Bitcoin and other digital assets, central banks can position themselves for a future where crypto plays a major role in the global financial system. Itâs a way to stay relevant as the worldâs financial landscape shifts.
đ¸In Closing
Thereâs no hard proof that central banks are buying Bitcoin, but the logic is clear. Bitcoin offers protection against inflation, uncertainty, and the risks tied to fiat currencies. Whether they admit it or not, central banks are certainly preparing for a future where Bitcoin plays a very important role.
