Citing worries about liquidity, the Swiss National Bank (SNB) has categorically dismissed ideas to keep Bitcoin in its reserves. A report by Reuters notes that SNB President Martin Schlegel underlined in a Friday statement that cryptocurrencies do not satisfy the rigorous criteria for Switzerland.
Worries about volatility and liquidity
Schlegel delivered his warning about Bitcoin along with other cryptocurrencies at the SNB General Assembly meeting. According to him, market liquidity for cryptocurrencies seems stable, but it becomes easily affected when. Schlegel also cautioned that the well-known volatility of bitcoin creates major risks for the long-term stability of reserves.
Schlegel said, “The high volatility of cryptocurrencies makes them inappropriate for long-term value preservation.” Focusing on stability and security, he underlined that digital currencies do not satisfy the central bank’s rigorous criteria for currency reserves.
Bitcoin initiative’s case for BTC awareness
The Bitcoin Initiative, a pro-Bitcoin advocacy group, offered a different perspective, even if the SNB disagreed. With just a small rise in volatility, they cited a portfolio simulation indicating that a 1% allocation of Bitcoin to the SNB’s reserves in 2015 would have almost doubled the bank’s returns. The group contended that bitcoin’s part in a diversified investment portfolio would enhance conventional assets and offer significant returns.
Positive qualities were also underlined, such as Bitcoin’s liquidity, with daily trading volumes in the billions, and its resilience during market. The Bitcoin Initiative observed that the bitcoin network stayed running and safe even during market declines, so increasing its attractiveness as a diversifying asset.
Stocks’ indirect exposure to Bitcoin
Though the SNB has denied holding Bitcoin directly, its holdings in companies with major Bitcoin corporate treasuries give it indirect exposure. This covers CleanSpark, MARA Holdings, Strategy, and Tesla stock.
Though Schlegel has underlined that direct Bitcoin holdings are not a practical choice right now, these investments give the SNB some degree of indirect exposure to Bitcoin. The SNB’s selection matches other central banks, such as the ECB and Poland’s central bank, which rejected Bitcoin reserves. The U.S. Federal Reserve dismissed the idea due to legal restrictions that impact Bitcoin ownership.
