Chances of a US Bitcoin Reserve Surge as Treasury Calls it ‘Digital Gold’

The United States Treasury acknowledged Bitcoin rapid growth and its growing importance in the financial market in a recently released report.

In its latest report for Q4 2024, the agency highlighted Bitcoin’s “rapid growth” referring to the cryptocurrency as “digital gold.”

This comes off the back of BTC’s latest surge above $100,000. It also follows discussions about the potential for the U.S. to adopt Bitcoin as part of its national reserve strategy.

Bitcoin’s Rise From Speculative Asset to “Digital Gold”

In the US Treasury’s report, they emphasized Bitcoin’s transformation from a speculative asset into a store of value, particularly in decentralized finance (DeFi).

Federal Reserve Chair, Jerome Powell, also highlighted Bitcoin’s similarity to gold, recently stating that BTC has a closer correlation to gold than to the U.S. dollar.

What started as a newfound financial concept by Satoshi Nakamoto in 2008 has grown at an unprecedented pace. Today, Bitcoin has amassed a market cap of over $2.3 trillion, even more than most recognized traditional assets.

Additionally, the US Treasury also highlighted the rapid growth of stablecoins, which now hold a significant share of their collateral in short-dated Treasury bills. The report noted that “over 80% of all crypto transactions now use a stablecoin as one leg of the transaction”

Furthermore, the Treasury projects continued growth in stablecoin markets and the broader digital market. According to the report, as the digital asset market cap grows, the structural demand for Treasuries may increase alongside. This could encourage governments to explore Bitcoin’s inclusion in reserves, especially during periods of volatility or inflation.

Why Bitcoin as a US Reserve Asset Makes Sense

Bitcoin’s classification as “digital gold” opens the door for its consideration as part of the U.S. national reserves. Traditionally, gold has served as a hedge during economic downturns, geopolitical uncertainty, and inflationary pressures. Bitcoin however mirrors these attributes, even offering additional advantages, such as digital portability and transparency.

The growing adoption of Bitcoin among investors reflects its increasing legitimacy. Governments around the world are now following suit to diversify their reserves.

Brazil also considers having a BTC reserve. News reports a few days ago stated that it is positioning itself to establish a strategic national Bitcoin reserve.