Countries are exploring Bitcoin as a potential hedge against the US dollar, but most still rely heavily on traditional assets like gold due to Bitcoin’s volatility, regulatory challenges, and lack of long-term stability. While some nations and investors see Bitcoin as a decentralized, scarce asset that could protect against fiat currency debasement, central banks generally prefer gold for its proven crisis resilience and regulatory clarity.
Central banks around the world continue to prioritize gold over Bitcoin in 2025. Gold’s appeal lies in its 5,000-year history as a store of value and a hedge against geopolitical and economic uncertainty. The global demand for gold ore reached $19.54 billion in 2025 and is expected to grow at an annual rate of 8.7% through 2030, driven by nations seeking to reduce exposure to fiat currencies and geopolitical risks. This preference reflects gold’s stability and the trust it commands among policymakers, contrasting with Bitcoin’s extreme price swings and regulatory ambiguity. For example, regulatory actions such as the €21.4 million fine imposed on Coinbase by the Central Bank of Ireland for anti-money laundering failures highlight the challenges cryptocurrencies face in gaining institutional acceptance[1].
Bitcoin’s technological allure and decentralization make it attractive to some investors and countries, especially those with historically weak or unstable currencies. In Latin America and parts of Africa, populist leaders have promoted Bitcoin as an alternative to local fiat currencies. El Salvador famously adopted Bitcoin as legal tender in 2021, allowing residents to pay taxes and debts with it. However, adoption remains limited, with less than 15% of the population using Bitcoin for everyday transactions as of 2023. The high volatility of Bitcoin’s price limits its usefulness as a medium of exchange, as most buyers and sellers prefer stable payment methods. Stablecoins, which are cryptocurrencies pegged to stable assets like the US dollar, are seen as more practical for payments due to their price stability and low transaction costs, but they also face regulatory scrutiny[4].
The narrative that Bitcoin serves as a hedge against dollar debasement and inflation is debated. Bitcoin’s price rally in recent years, including a 50% increase since the 2024 US elections, has been interpreted by some as a bet against the weakening of fiat currencies due to loose fiscal policies and political risks. However, closer analysis suggests Bitcoin’s surge is not solely driven by fears of dollar debasement. Alongside Bitcoin, gold and other precious metals have also gained, indicating a broader search for safe-haven assets amid economic uncertainty. Investors view Bitcoin as a scarce, counterparty-free asset that could preserve value in inflationary or politically unstable environments, but its short history and price swings make it a less reliable hedge compared to gold[2].
Institutional interest in cryptocurrencies, including Bitcoin, is growing but remains cautious. More than half of global hedge funds now hold some crypto-related assets, with an average allocation of about 7% of their portfolios. Many of these investments are made through crypto derivatives rather than direct holdings, allowing exposure to price movements without owning the underlying assets. This trend reflects increasing acceptance of digital assets in mainstream finance, partly driven by regulatory developments in the United States that aim to provide clearer frameworks for crypto markets. However, risks remain, such as market volatility and infrastructure vulnerabilities exposed by events like flash crashes[3].
In some countries, Bitcoin and other cryptocurrencies are gaining popularity among younger, tech-savvy populations seeking alternatives to traditional banking and investment options. For example, in Saudi Arabia, about 12% of the population owns cryptocurrencies, driven by millennials and Gen Z looking for new ways to grow their wealth. Similarly, in Singapore, over 11% of people own crypto assets, though cryptocurrencies are not recognized as authorized payment methods. These trends reflect a growing cultural acceptance of digital currencies, even if official government policies remain cautious or restrictive[5].
Crypto salaries, where employees are paid in cryptocurrencies, are also becoming more common in certain countries. This trend is driven by the desire for faster, cheaper international payments and protection against inflation in countries with unstable currencies. Platforms offering crypto payroll solutions now provide regulatory compliance and global coverage, making it easier for businesses to adopt this model. Countries with high inflation, such as Argentina, see crypto salaries as a way to preserve purchasing power and offer financial security to workers[6].
Overall, while Bitcoin is increasingly recognized as a digital asset with potential as a store of value and hedge against fiat currency risks, it has not yet displaced gold or other traditional reserves in the portfolios of most countries. The combination of Bitcoin’s price volatility, regulatory uncertainty, and limited use as a transactional currency means that central banks and sovereign wealth funds remain cautious. Gold’s long-standing role as a crisis-proven asset and its regulatory clarity continue to make it the preferred choice for hedging against the US dollar and geopolitical risks[1][4].