Governments worldwide will finally overcome years of reticence about buying Bitcoin and start pouring money into the cryptocurrency in 2025, according to a new report.
If the prediction published Tuesday by asset manager Fidelity turns out to be correct, it would mark a huge change in how most countries deal with Bitcoin. Since the cryptocurrency was created 16 years ago, many nations have opposed creating Bitcoin reserves alongside their traditional stockpiles of foreign currency and gold because of the perceived risk and lack of regulatory clarity.
Any move by countries to establish national Bitcoin reserves, particularly by large wealthy nations, would help solidify the asset as a legitimate store of value and likely trigger a surge in its price.
Fidelity expects some countries to start buying Bitcoin for their treasuries and central banks to hedge against financial instability, much like gold reserves. The asset manager’s prediction comes as Bitcoin recently surpassed $100,000 and pro-crypto President-elect Donald Trump prepares to take office.
Fidelity research analyst Matt Hogan explained in the report that countries may fall behind if they do not invest in Bitcoin due to macroeconomic challenges like inflation, currency devaluation and fiscal deficits. He didn’t mention the potential negatives: Losing big money if Bitcoin’s price tumbles.
“Not making any bitcoin allocation could become more of a risk to nations than making one,” he said.
Some governments, like the United States and China, already hold some Bitcoin, the report notes. But generally, they acquired the currency by seizing it from lawbreakers and have yet to purchase the asset as part of a broader financial strategy.
The exception is El Salvador, which has been a pioneer in this space as the first country to adopt Bitcoin as a reserve asset. The country has accumulated nearly 6,000 Bitcoin which is now worth more than $550 million, according to the report
For its part, Fidelity was among the first traditional finance institutions to launch a spot Bitcoin ETF last January. Many institutional investors have also joined the Bitcoin bandwagon by buying cryptocurrency as just one of many different kinds of investments.
The BITCOIN Act
As part of his pro-crypto campaign platform, Trump supported the U.S. establishing a strategic Bitcoin stockpile. Since the election, he has reiterated his support for the plan, boosting Wyoming Sen. Cynthia Lummis’ BITCOIN Act, which, if passed, would direct the U.S. Treasury to purchase one million Bitcoin over a five-year period.
The cost of such a purchase, at Bitcoin’s current value, would be about $94 billion.
“If the bill is enacted, we believe the political and financial game theory at play will force other nations to follow suit,” Hogan said.
Lawmakers in other countries, including in Russia, Brazil, and Poland, are already pushing for Bitcoin investment. However, if governments do begin buying Bitcoin, they will probably do so in secret, the report said, because announcing it would likely influence investors and drive up the price, making it more expensive for their own purchases.
It’s unclear if Trump will be able to make his Bitcoin reserve plan a reality for crypto bulls, Hogan says. But he added that Fidelity is encouraged to see that digital assets have “developed from that of a fringe community to one warranting attention from politicians for its transformative potential to disrupt the traditional financial system as we know it.”
