Can gold and Bitcoin coexist on central bank books? Deutsche Bank weighs in

A declining dollar, fresh geopolitical and tariff uncertainty, and questions of the Fed's independence have led gold and Bitcoin to outperform

With rising geopolitical tensions, concerns about government shutdowns, and policy uncertainties, the rally in gold and bitcoin prices has once again caught the attention of investors and policymakers. This time, however, a key question emerges: Can Bitcoin qualify alongside gold as a reserve asset in the US?

 

So far this year, commodity prices have outperformed equities, led by a rally in silver (up 66.80 per cent) and gold prices (up 48.09 per cent). In the same period, the biggest cryptocurrency -- Bitcoin -- has rallied 31.81 per cent, topping the $125,000 mark over the weekend. 

 

Calendar year 2025 is proving to be an excellent year for both Bitcoin and gold demand, according to analysts at Deutsche Bank Research Institute. A declining dollar, fresh geopolitical and tariff uncertainty, and questions of the Federal Reserve's independence have led both asset classes to outperform, it said in a September 22 note. 

   

A key trigger for gold's rally is strong central bank buying, with a 2025 World Gold Council survey showing record expectations -- 43 per cent of central banks plan to boost their own reserves, and 95 per cent see global holdings rising in the next year.

 

With the falling share of the dollar in central bank reserves and the Trump Administration’s decision to establish a US Strategic Reserve this past March reignites the argument for central banks to hold Bitcoin as a reserve asset, Deutsche Bank said. 

 

Historically, central bank reserves have consisted of gold and "safe-haven" currencies. However, high inflation, geopolitical instability, and dollar independence combined with pro-crypto regulation efforts have made authorities increasingly re-evaluate their reserve compositions, it said.   CATCH STOCK MARKET LIVE UPDATES TODAY

Can Bitcoin be part of reserve assets? 

Analysts concluded that Bitcoin and gold will continue to co-exist in the medium term, with gold maintaining its lead in official reserves and Bitcoin expanding in private and alternative reserves. 

 

Currently, the US Dollar remains the top currency in central bank reserves, but there are signs that countries are seeking to diversify, the note said. "Additionally, at a time when crypto legislation and innovation is accelerating in the country where it matters most, Bitcoin seems to be on its way towards mass adoption."

 

By 2030, Deutsche Bank Research Institute predicts that Bitcoin will join gold in many central banks' official reserve balance sheets. 

 

Bitcoin and gold are deemed complementary alternatives to traditional safe-haven reserves due to their low correlation with other asset classes, relatively scarce supply, and use as a hedge against inflation and geopolitical volatility. Analysts also note that Bitcoin’s volatility should decline with the regulatory efforts accelerating and as more transactions are conducted. 

 

However, they note that neither Bitcoin nor gold is likely to replace the US dollar as the primary reserve asset or means of payment. Analysts expect Bitcoin adoption to grow as evolving regulations, macroeconomic trends, and time drive wider acceptance of the cryptocurrency as a store of value. "So long as we are human, Bitcoin and other alternative assets will likely continue to compete for our attention."