Czech National Bank Governor Considers Buying Bitcoin. Why?
Czech National Bank Governor Considers Buying Bitcoin.
In the first half of 2024, then-US presidential candidate Donald Trump surprised the world with his clear support for the cryptocurrency industry. He stated that the coin niche needed adequate regulation, which would eventually turn America into the crypto capital of the world. Then the politician promised to fire the current SEC Chairman Gary Gensler, after which he even announced the prospect of creating a national Bitcoin reserve. Things have not come close to this yet, but other countries have also started talking about this idea.
Which States and Countries Buy Bitcoin
The trend of governments buying Bitcoin is not new, but it remains uncommon. However, on September 7, 2021, BTC became the national currency of El Salvador, along with the US dollar.
The day before, the country’s president Nayib Bukele announced the purchase of 400 coins at a rate of $51,769. Since then, the state has allegedly accumulated 6,010 BTC, which is now valued at $590 million. The increase in the position due to the growth in the value of Bitcoin amounted to $167 million.
Bitcoin Purchases by the Salvadoran Government
Now the possibility of accumulating BTC is being considered by the head of the Czech Central Bank, Aleš Michl. According to him, the cryptocurrency could become a possible tool for diversifying the country’s assets, which indicates the gradual global recognition of Bitcoin and other coins as a technology for saving capital.
Mikhl spoke about this on CNN Prima News. The expert noted that he is considering the prospect of acquiring “several bitcoins” for diversification. Such an amount would not be considered a significant investment for the bank, but in any case it must be approved by the Central Bank’s seven-member board.
Advisor to the relevant board, Yanis Aliapoulios, confirmed that the bank is not currently considering allocating funds for the purchase of BTC. Here is his response, as reported by Cointelegraph .
As a result, the Czech National Bank is not considering acquiring crypto assets for its own reserves. Although Governor Michl does not rule out holding debates on this topic in the future.
The bank is now targeting gold acquisitions. According to the institution’s plan, the precious metal will account for approximately 5 percent of the bank’s total assets by 2028.
Buying Cryptocurrency by Investors
Intergovernmental blockchain expert Andy Lian commented on the developments. He believes that the news indicates that Bitcoin is increasingly being recognized as a full-fledged investment at the highest level. Here is the quote.
As more countries consider this path, we may see a gradual rethinking of what counts as a “safe” reserve asset. If Bitcoin takes its place in national reserves, it could fundamentally change the global financial system, moving it toward more decentralized and digital approaches to economic stability.
However, it is also worth considering Bitcoin’s volatility, that is, the ability of the cryptocurrency to change sharply in price. Lian is sure that this will end in sharp financial fluctuations in the market.
US Bitcoin Strategic Reserve
It is worth noting that the US is not yet accumulating bitcoins, as Donald Trump’s inauguration is just under two weeks away. However, the legislative framework for this already exists.
In particular, in June 2024, Senator Cynthia Lummis introduced a bill that would require the US government to buy one million bitcoins over five years. These coins would have to be stored without moving for at least twenty years, with the exception of selling BTC to pay off US government debt.
US Senator Cynthia Lummis
In addition, at least three US states are considering the possibility of buying BTC to create the corresponding reserves. We are talking about Texas, Pennsylvania and Ohio, which we discussed in a separate article. At the same time, state government representatives note that buying bitcoins could protect citizens’ money from a possible depreciation of the dollar.
Whether the US government decides to accumulate bitcoins – time will tell. For example, the head of the Strike platform Jack Mallers admits that Trump may issue an order to buy BTC on the first day after the inauguration. Well, the former head of the BitMEX crypto exchange Arthur Hayes admits that one should not count on the emergence of such a reserve, because it takes a lot of time.
Former BitMEX CEO Arthur Hayes
In any case, the potential for cryptocurrency accumulation by authorities will create hype around digital assets worldwide. And this, in theory, can affect the traditional cycles of growth and decline of the coin market, which last for four years.
In his previous essay, Arthur Hayes stated that the possible reluctance of the US government to buy bitcoins in the future would not be a bad thing. After all, officials have already created a narrative that cryptocurrency can be considered a full-fledged investment tool even through talk. Well, this, in turn, will force other governments and companies to spend resources on acquiring BTC, not wanting to lag behind in the future. It seems that the situation may indeed develop in this way.
