By 2025, nation-states and central banks are expected to invest in BTC, according to Fidelity Digital Assets.

Fidelity Digital Assets predicts a significant shift in how nation-states and financial institutions approach Bitcoin, with the cryptocurrency poised to become a key asset in 2025. According to a recent research report, the firm anticipates that governments, central banks, and sovereign wealth funds will increasingly view Bitcoin as a hedge against rising inflation, currency devaluation, and escalating fiscal deficits.

Fidelity analyst Matt Hogan explained that the current macroeconomic challenges make it increasingly risky for countries to ignore Bitcoin. “With inflation on the rise, currencies weakening, and fiscal deficits growing, failing to have exposure to Bitcoin may soon be seen as a bigger risk than investing in it,” he stated in the report.

The firm also noted that key political figures in the U.S., including President-elect Donald Trump and Senator Cynthia Lummis, have shown support for creating a strategic Bitcoin reserve. While it remains uncertain if these plans will come to fruition, Fidelity suggests that if the U.S. adopts such a strategy, it could set a precedent for other countries to follow.

Lummis’ proposed “Bitcoin Act of 2024” could be a game-changer, according to the report. If passed, it could trigger a chain reaction, with other nations rushing to build their own Bitcoin reserves. “The political and financial dynamics would create a competitive environment that could compel other countries to adopt similar strategies,” the report added.

Fidelity also speculates that any country looking to accumulate Bitcoin would likely do so discreetly, avoiding public announcements that could trigger a rush of speculative buying and inflate the asset’s price.

The U.S., China, the U.K., Ukraine, Bhutan, and El Salvador are currently among the largest government holders of Bitcoin, though most of their holdings come from seizures related to criminal activity. Fidelity suggests that in the near future, more governments could take strategic steps to acquire Bitcoin as part of their broader economic strategy.