Matthew Ferranti, a Havard Ph.D. student in the department of economics, released a research paper recently. According to the report, BTC is an alternative asset that can hedge against risks.
Additionally, the researcher noted that central banks with large Bitcoin reserves could mitigate the effect of financial sanctions from foreign entities. Furthermore, the research highlighted why central banks should have a BTC reserve.
Ferranti suggested that it would be beneficial for central banks to have a small amount of BTC reserves under typical conditions. However, he believes it would be better if central banks had larger Bitcoin reserves.
According to him, such reserves would be beneficial if sanctions arise. The PhD student noted that the Bitcoin reserve would augment the central bank’s gold reserves.
The study also highlighted that nations at a higher risk of facing US sanctions are stocking their gold reserves. Countries that have lower chances of receiving sanctions have little gold reserves.
According to the study, Bitcoin reserves are a good alternative for central banks. This is because of how difficult it is to buy gold. Bitcoin reserves can also counter the risks associated with several sanctions.
In addition, the researcher argued that the possibility of penalties could be good. It would stimulate central banks to take steps towards diversifying their reserves.
The researcher advised that central banks can consider adding Bitcoin to their reserves. Ferranti concluded that there are considerable advantages if banks diversify their reserves and invest in gold and Bitcoin.
Increase In Self-Custody Shows Reduction In Sell Pressure – Bofa
Meanwhile, Digital strategists at the BofA (Bank of America) stated that the correlation between gold and Bitcoin had increased recently. This shows that investors now have more confidence in Bitcoin despite the economic meltdown.
Furthermore, the strategists noted that the increase in self-custody of crypto assets shows that sell pressure has reduced among investors. Usually, users have to move their digital assets to exchange platforms before they can sell them.
However, storing these digital assets in a cold wallet means that users do not intend to sell them. Moreover, self-custody for digital assets is gaining broader attention in the crypto industry.
One of them includes loss of funds due to bugs within smart contracts. Another problem is that loved ones can’t access the holder’s crypto assets after death.
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