While central banks have avoided Bitcoin (BTC) , they have begun buying gold to some extent. For example, the Russian monetary management now owns a precious metal worth more than $ 100 billion, which is more than 2,000 tons after buying 20 tons just a few weeks ago.
Other well-known central banks made similar purchases because they liquidated foreign currency reserves, including the long-standing reserve currency, the US dollar (USD).
Gold is bought in bulk
According to the famous cryptoinvestor Anthony Pompiano, the central banks of the world collected more than $ 15 billion in gold in the first six months of 2019. This figure stems from the Financial Times report, which states that central banks accounted for one sixth of global demand in the first half of 2019. Although $ 15 billion is just 0.2% of the market capitalization of gold, this marks one of the biggest accumulation events in the written history.
Pompiano argues that these currency giants are trying to hedge their rates on the US dollar, despite the fact that the dollar index (DXY) continues to grow.
It seems that fear is that the US may be at a disadvantage in the global economy due to higher interest rates, the ongoing trade war with China and the growth of other currencies.
There also seem to be concerns about overall macroeconomic risk, which has become apparent due to the collapse in the European banking sector, runaway sovereign debt, geopolitical tensions, protests around the world, and other trends, including the growth of alternative money, such as Bitcoin.
And not only central banks fear dollar risk. JP Morgan recently published a report in which he advises his clients to reduce the allocation of US dollars to gold. Referring to the report, Bitcoin and the Golden Bull Max Kaiser added in a recent issue of the Kaiser Report that the dollar could lose its reserve status.
Bitcoin will be bought by central banks?
But why exactly the dollar will lose its reserve status? According to some reports, this may be Bitcoin.
Pompiano, co-founder of the investment company Morgan Creek Digital Assets, writes that central banks may soon start buying Bitcoin in large quantities.
From an investment point of view, Pompiano argues that Bitcoin makes much more sense. The most prominent of these causes is the asymmetric risk-return profile of cryptocurrency , which means that it has excessive growth potential for a relatively small decline.
Indeed, BTC is estimated at $ 200 billion; Global wealth is somewhere in the hundreds of trillions, depending on what classes of assets you include. If Bitcoin should absorb 1% of global wealth, it still needs 500%, up to $ 50,000 per coin.
Pompiano argues that as soon as central banks recognize the fact that Bitcoin has an “uncorrelated, asymmetrical growth profile,” “each central bank will buy BTC.”
This is not all. In a recent interview, a former Facebook employee (who claims that the social networking giant is perhaps the most important company to decorate cryptocurrency) explained that Bitcoin is better than gold .
Speaking to millions of people, Pompiano said that, unlike gold supplies, Bitcoin is predictable, inflationary, and can be predicted and tracked using the pseudo-transparent nature of the blockchain .
Published 05.08.2019
Share this material on social networks and leave your opinion in the comments below.
