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The US Treasury has officially recognized Bitcoin as "digital gold" in its latest report, spotlighting the cryptocurrency’s $2.3 trillion market cap and its dominance as a store of value. The report also notes the growth of stablecoins tied to treasuries.
Bitcoin Recognized as "Digital Gold" in Treasury Report
Bitcoin and other digital currencies have developed quickly from a tiny foundation, according to the US Treasury's 2024 Q4 report. The US Department claims that the principal function of Bitcoin, which they called "digital gold," is to serve as a medium of exchange and a medium of value in the DeFi ecosystem.
Federal Reserve Chair Jerome Powell, echoing the US Treasury, recently compared Bitcoin to gold. Bitcoin, according to Jerome Powell, is a speculative asset with more in common with gold than the US currency.
Coincidentally, the US department has stated that speculation has been a major factor in the rise of digital assets like Bitcoin. Whatever it is, Bitcoin's rise has been phenomenal.
Bitcoin's Market Cap Surpasses $2.3 Trillion
The flagship coin's market cap was $6.4 million in 2015. It reached $194 billion in 2019. There is now $2.3 trillion worth of Bitcoin on the market. After passing the $100,000 mark not long ago, the price of Bitcoin shows no signs of slowing down.
More and more institutions are becoming afraid of missing out (FOMO) on Bitcoin's potential adoption as a balance sheet asset due to the cryptocurrency's meteoric rise in value. Worksport, a company, recently declared that it will use Bitcoin and XRP as its corporate treasury.
Stablecoins Propel Demand for Treasury Bills
Another kind of digital asset that has grown rapidly is stablecoins, according to the US Treasury research. The demand for short-dated treasuries has increased slightly, according to the research, due to the growth of stablecoins, Coingape shares.
It is believed that treasury bills and treasury-backed repo transactions constitute a substantial component of the collateral for fiat-backed stablecoins. According to the US Treasury, a total of $120 billion worth of stablecoins are invested directly in Treasuries.
Digital Asset Market Poised for Continued Growth
Both the total size of the digital asset market and the market for stablecoins are anticipated to continue growing in the foreseeable future, according to the US government. They also speculate that future hedging requirements and fight-to-quality demand for Treasuries would be prompted by the tremendous volatility and fast expansion of digital assets like Bitcoin.
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