A recent paper from the Bitcoin Policy Institute argues that central banks should consider adopting Bitcoin as a reserve asset. With central banks currently holding $2.2 trillion in gold and increasing their allocations, the paper emphasizes Bitcoin's potential benefits in hedging against inflation and geopolitical risks. Authored by economist Matthew Ferranti, the paper highlights Bitcoin's weak correlation with other financial instruments, its lack of counterparty risk, and its effectiveness against sovereign defaults. The paper suggests that, while Bitcoin might not suit every central bank, it shares similar store-of-value properties with gold, especially during rapid currency depreciation. The Institute's findings resonate with calls from U.S. lawmakers and presidential candidates to establish Bitcoin as a strategic reserve asset. Following endorsements at a recent Bitcoin conference, proposals include acquiring a significant percentage of Bitcoin's total supply over time. Despite enthusiasm from Bitcoin advocates, not all industry leaders agree on this approach, citing concerns that such adoption might have mixed consequences for Bitcoin's market value.

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