Central Bank Reserve Asset Allocation Dilemma: Why Traditional Gold Still Suppresses Bitcoin

Although the industry is actively promoting the narrative of Bitcoin as “digital gold,” central banks around the world are far more conservative in their reserve asset allocations than the market imagines. Recent analysis reports indicate that, under the current risk-averse cycle, gold significantly outperforms cryptocurrencies as a traditional hedging tool.

What Are the Advantages of Gold Reserve Allocation?

Over the past year, gold has achieved nearly 80% excess performance compared to Bitcoin, reflecting fundamental differences in risk characteristics between the two asset classes. When interest rates fall and inflation gradually declines, central banks tend to allocate to traditional hedging assets with lower volatility and ample liquidity. The market currently expects the Federal Reserve to shift to a more accommodative monetary policy by 2026, further enhancing gold’s appeal as an inflation hedge.

Looking at the global reserve structure, gold remains the mainstream choice. When selecting reserve assets, central banks focus on political neutrality, market acceptance, and historical credibility. The decades of accumulated reserve consensus around gold make it difficult to replace quickly in official asset allocations.

The Practical Obstacles for Bitcoin as Official Reserves

As an emerging asset, Bitcoin faces several real-world challenges:

First, excessive volatility. Central bank reserves prioritize capital preservation and stability over maximizing returns. Bitcoin’s short-term fluctuations of 20-30% pose risks to central banks’ balance sheet management.

Second, political sensitivity is unavoidable. Different countries have vastly different regulatory attitudes toward cryptocurrencies, making Bitcoin’s neutrality as a cross-border reserve asset difficult to achieve consensus on.

Additionally, market depth and liquidity still need improvement. Large-scale central bank purchases would face market capacity issues, which starkly contrasts with the maturity of the gold market.

Will Policy Shifts Bring Changes?

The future direction largely depends on U.S. policy developments. If the new administration adjusts its stance on gold reserves and experiments with crypto asset allocations within marginal ranges, Bitcoin’s position in official reserves could gradually improve. However, such a shift will not happen overnight, and the core status of gold reserves is unlikely to be challenged in the medium term.

In summary, traditional gold reserves still hold unmatched advantages in risk management and market acceptance. For Bitcoin to become part of official reserve allocations, it must overcome multiple hurdles related to volatility, political acceptance, and market depth.