The global demand for Gold as a reserve currency has seen a significant uptick in the past year. Countries in the BRICS group, particularly China and Russia, have been bolstering their gold reserves as part of their efforts to reduce dependence on the US dollar. This move towards dedollarization has led to an increase in Gold’s share as a global reserve currency, with its percentage rising by 3% in the first quarter of 2025 to reach 24%, the highest level in three decades.
In contrast, the US dollar’s share as a global reserve currency has declined by 2% during the same period, dropping to around 42%, the lowest level since the 1990s. Gold has even surpassed the Euro to become the second-largest global reserve asset in 2024, further solidifying its position in the global financial landscape.
The growing demand for Gold as a reserve currency has been further fueled by advancements in digitization, particularly through blockchain technology. Tokenized gold now has a valuation of approximately $2.59 billion, with a 24-hour average trading volume of about $492 million. Leading the pack are tokens like Tether Gold (XAUT) and PAX Gold (PAXG), which have seen significant traction in the market.
On the other hand, Bitcoin is also gaining traction as an alternative global reserve currency. The mainstream adoption of Bitcoin by institutional investors, retail traders, and even nation-states has contributed to its increasing market value. Federal Reserve Chair Jerome Powell has acknowledged Bitcoin as digital gold, with more investors turning to it as a hedge against global inflation.
Recent analysis by JPMorgan suggests that Bitcoin is undervalued compared to Gold, with a midterm price target of around $126k set by the bank. This bullish outlook is driven by corporations incorporating Bitcoin into their strategic reserves, further boosting its value in the market.
As more countries follow the lead of the United States in adopting Bitcoin reserves, the cryptocurrency’s share as a global reserve currency is expected to grow organically. Bitcoin’s scarcity and real-world utility, especially in facilitating payments, set it apart from traditional assets like Gold, making it an attractive option for diversifying reserve holdings.
In conclusion, the evolving landscape of global reserve currencies is seeing a shift towards assets like Gold and Bitcoin, as countries seek to reduce their reliance on traditional fiat currencies. With Gold and Bitcoin both playing important roles in the future of global finance, it will be interesting to see how their respective shares in reserve holdings continue to evolve in the coming years.