Deutsche Bank researchers have predicted that Bitcoin and gold could both co-exist on central bank balance sheets by the end of the decade.
The paper published by the prominent bank asserts that gold and Bitcoin, which are often pitted against each other, can actually serve as complementary diversifications. Both assets can serve as a hedge against geopolitical uncertainty.
Declining volatility
Due to rapid institutional acceptance that was pushed into high gear following the launch of Bitcoin exchange-traded funds (ETFs), Bitcoin's volatility has experienced a rather sharp decline.
Deutsche Bank expects this trend to continue in the future due to growing regulatory clarity and deepening liquidity.
The bank argues that the current bullish trend might be more sustainable compared to previous market cycles that were primarily driven by speculation.
Its analysts have noted that gold also faced some challenges during the early stages of adoption. With "digital gold," history is seemingly repeating itself, according to Deutsche Bank.
US dollar is safe
At the same time, Deutsche Bank analysts believe that Bitcoin is not going to replace the U.S. dollar.
Countries will make sure that BTC and digital assets do not threaten the sovereignty of fiat currencies.
That said, digital assets will emain part of global finance since "human nature leads to a desire to break away from traditional assets," Deutsche Bank argues.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team