The Banking Executive Magazine - February 2026 Issue 2

Should Central Banks Hold Bitcoin Reserves? BITCOIN’S STRUCTURAL CHARACTERISTICS Bitcoin’s total supply is capped at 21 million coins, of which approxi- mately 93% have already been mined. Unlike fiat currencies, whose supply is ultimately subject to policy decisions, Bitcoin’s issuance sched- ule is predetermined by code. This scarcity underpins the “digital gold” analogy frequently invoked by its ad- vocates. Bullish projections suggest that Bit- coin’s total market capitalization could eventually rival that of gold, currently estimated at between $30 trillion and $35 trillion. To reach such a valuation, Bitcoin’s price would need to exceed $1.5 million per coin—an outcome that, while mathematically feasible, remains speculative. More modest scenarios attempt to anchor valuation in usage. The global underground economy—en- compassing activities ranging from money laundering and narcotics traf- ficking to tax evasion—is widely es- timated to exceed $20 trillion annually. If Bitcoin were to capture a quarter of that transactional ecosys- tem, and if its economic utility were equivalent to a 2% transaction fee similar to credit-card networks, this could imply around $100 billion in annual transactional value. Capital- ized appropriately, such usage might justify a market capitalization near $1 trillion, or approximately $50,000 per coin. These calculations are not forecasts; they are frameworks for thinking about valuation. They underscore that Bitcoin’s price dynamics are in- fluenced not only by speculative sen- timent but also by perceived utility within certain economic niches. VOLATILITY AND THE LIMITS OF HISTORICAL COMPARISON Yet, for central bankers accustomed to multi-decade planning horizons, Bitcoin’s short history presents a sig- nificant constraint. The asset has ex- isted for less than two decades—insufficient for robust long-run extrapolation. Gold, by contrast, has functioned as a mone- tary asset across civilizations and eras, surviving wars, regime changes, and systemic crises. Recent price movements illustrate the challenge. Bitcoin fell sharply from above $124,000 in October 2025 to under $65,000 within months, even as gold continued its the BANKING EXECUTIVE 20 ISSUE 206 FEBRUARY 2026