LIVE MARKETS-Is bitcoin the next gold? DB analysts think so

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IS BITCOIN THE NEXT GOLD? DB ANALYSTS THINK SO

Bitcoin's BTC= rally to all-time highs this year followed President Donald Trump's easing regulation on the crypto industry. Its emerging status as a potential macro hedge has also helped, analysts at Deutsche Bank Research Institute say.

Analysts at Deutsche Bank Research Institute expect the world's best-known crytocurrency to coexist with gold on central bank balance sheets by 2030.

Gold XAU= has cemented its status as a safe-haven, surging over $3,728 after hitting a fresh record high on a weakening dollar, geopolitical and tariff uncertainty as well as questions surrounding Fed independence. While, bitcoin reached close to $125,000 and is up 20.7% for the year.

Pointing to declining share of USD as a central bank reserve, along with the current U.S. administration's decision to establish a U.S. strategic reserve in March, DB analysts view bitcoin as a "credible alternative or complement to gold."

"Like gold, bitcoin has a fixed supply (capped at 21mn). This creates disinflationary benefits, meaning that bitcoin’s value tends to not erode compared to fiat currencies, which lose purchasing power over time due to inflation," they say in the note.

Mentioning examples of companies that have already outpaced central banks in this adoption - including Tesla TSLA.O, and Strategy MSTR.O, along with less conventional players like Beck & Bulow, Metaplanet 3350.T and DDC Enterprise DDC.N - DB analysts cite the firms' ability to profit from extra cash while remaining liquid.

For the medium term, gold will maintain its lead in official reserves as bitcoin expands in private and alternative reserve spaces.

By 2030, on the other hand, they expect the two to be complementary alternatives and for bitcoin's volatility to decline as it follows gold's historical pathway into widespread acceptance.

"We believe that bitcoin adoption will continue, as regulatory developments, macroeconomic conditions and – above all – time should enable the public to increasingly embrace bitcoin as a store of value."

(Twesha Dikshit)

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