Rising inflation, currency devaluation, and growing fiscal deficits are expected to push countries to make strategic allocations in Bitcoin, according to a report from Fidelity Digital Assets.
The report suggests that 2025 could be a pivotal year for the acceptance and adoption of Bitcoin (BTC), the world’s leading cryptocurrency. Fidelity Digital Assets analyst Matt Hogan stated, “We anticipate that more nation-states, central banks, sovereign wealth funds, and government treasuries will seek to establish strategic positions in Bitcoin.”
With macroeconomic challenges like rising inflation, currency debasement, and mounting fiscal deficits, the report argues that failing to make a Bitcoin allocation could present more risks than making one.
Fidelity highlighted that both President-elect Donald Trump and Senator Cynthia Lummis have advocated for the United States to establish a strategic Bitcoin reserve. However, the report noted that it remains to be seen whether these plans will come to fruition by 2025.
Senator Lummis had introduced the “Bitcoin Act of 2024” in July. According to Fidelity, if the bill is enacted, it could create a financial and political game theory that would compel other nations to follow suit and adopt similar strategies.
Should nation-states move forward with a Bitcoin accumulation strategy, Fidelity suggests they may begin purchasing Bitcoin quietly, as any public announcement of their intentions could drive prices higher due to increased demand from other investors.
The report also identified the U.S., China, U.K., Ukraine, Bhutan, and El Salvador as some of the largest government holders of Bitcoin. It noted, however, that many of these countries acquired their Bitcoin through government seizures and the recovery of assets linked to criminal activity.
