Fidelity's Bold Prediction: Countries Will Embrace Bitcoin Reserves by 2025!

Governments worldwide are expected to overcome years of reticence about buying Bitcoin and start investing in the cryptocurrency by 2025, according to a new report by Fidelity. This marks a significant shift in how most countries manage their financial reserves.

Since Bitcoin's inception 16 years ago, many nations have avoided creating Bitcoin reserves alongside their traditional stockpiles of foreign currency and gold due to perceived risks and regulatory uncertainties. However, if large nations establish national Bitcoin reserves, it would help solidify the asset as a legitimate store of value and likely trigger a surge in its price.

Fidelity anticipates that countries will begin purchasing Bitcoin for their treasuries and central banks as a hedge against financial instability, similar to gold reserves. The report arrives as Bitcoin recently surpassed $100,000 and with pro-crypto President-elect Donald Trump preparing to take office.

Matt Hogan, a research analyst at Fidelity, warned that countries may fall behind if they do not invest in Bitcoin, especially amid macroeconomic challenges such as inflation and currency devaluation. He suggested that failing to invest in Bitcoin could become a greater risk for nations than making the investment itself.

While some governments, including the United States and China, hold Bitcoin—often acquired through law enforcement—El Salvador stands out as a pioneer, being the first country to adopt Bitcoin as a reserve asset. El Salvador has accumulated nearly 6,000 Bitcoin, valued at over $550 million.

Fidelity has been at the forefront of the traditional finance sector embracing Bitcoin, launching a spot Bitcoin ETF last January. Many institutional investors are now considering Bitcoin as part of a diversified investment strategy.

In the U.S., Trump has endorsed the BITCOIN Act, which proposes that the U.S. Treasury purchase one million Bitcoin over five years, costing approximately $94 billion at current market prices. Hogan believes that if this bill passes, it will compel other nations to follow suit.

Countries like Russia, Brazil, and Poland are already advocating for Bitcoin investments. However, if governments start buying Bitcoin, they might do so covertly to avoid inflating the price before their purchases.

Fidelity remains optimistic, noting that digital assets have evolved from a fringe community to a significant topic of political discussion due to their potential to disrupt the traditional financial system.