Deutsche Bank Predicts: Gold and Bitcoin May Both Feature in Central Bank Reserves in the Future

Although gold and cryptocurrencies have shown divergent short-term trends, Deutsche Bank believes that the two could develop side by side in the coming years.

"By 2030, central banks' balance sheets might include both gold and Bitcoin," wrote Deutsche Bank analysts Marion Laboure and Camilla Siazon in a recent report.

This optimistic assessment comes after Bitcoin fell below $113,000 on Monday, while gold hit a record high of $3,703 per ounce on the same day. This divergence highlights the short-term differences between high-risk assets like cryptocurrencies and traditional safe-haven assets.

Despite Monday's pullback, Bitcoin's overall performance remains resilient. The Deutsche Bank analysts stated that after hitting a new high in August, Bitcoin's volatility dropped to a historical low, indicating growing acceptance among institutional investors.

While gold has long dominated foreign exchange reserve portfolios, Deutsche Bank analysts believe that a prudent allocation to Bitcoin could complement traditional assets.

"Despite the rising scale of global gold reserves, central bank demand for gold remains high," wrote Laboure and Siazon. "High inflation, geopolitical instability, de-dollarization trends, coupled with regulatory support for cryptocurrencies, are prompting authorities to increasingly reassess their reserve structures."

Some market observers remain cautious. Bitcoin's sharp volatility means it carries risks as a hedging tool, especially during market turbulence. In contrast, gold continues to attract investors during uncertain times due to its long-term safe-haven track record.

However, Deutsche Bank added: "As long as we remain human, Bitcoin and other alternative assets will likely continue to compete with traditional assets for our attention."