Bitcoin should be studied, not feared, says Czech central bank head

From cointelegraph by Zoltan Vardai

Studying Bitcoin’s underlying technology and economic impact could strengthen central banks despite past hesitancy from financial institutions concerned about its volatility, according to Aleš Michl, governor of the Czech National Bank (CNB).

Bitcoin 

BTC$96,270should be broadly studied by central banks, not feared, Michl stated in a Feb. 19 X post. He said Bitcoin’s unique technology should not be “lumped together with other crypto assets,” adding:“We central bankers should study it and explore the technology it is built on. Studying Bitcoin won’t harm us—on the contrary, it will strengthen us.”

Michl’s comments come nearly three weeks after the governor shared a proposal for creating a Bitcoin “test portfolio” with the CNB’s bank board meeting on Jan. 30.

“This step is motivated by a desire to learn about and try out this highly risky alternative asset,” added the governor.

Source:  Aleš Michl

However, Michl emphasized that this is only the “initial stage of the analysis” and that a final decision will depend on the outcome of the analysis.

Michl started looking at Bitcoin  as a potential reserve asset on Jan. 7, when he was considering acquiring “a few Bitcoin” for diversification, Cointelegraph reported.

Bitcoin’s 130% yearly  returns for 2024 make it difficult to ignore for financial institutions and large investment funds.

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Czech National Bank to consider $7 billion Bitcoin reserve plan

The CNB may become the first European central bank to invest in Bitcoin if the proposal is approved.

If approved, the investment may amount to over $7.3 billion in Bitcoin purchases, given the CNB’s total reserves of more than $146 billion, according to André Dragosch, head of research at Bitwise.

Dragosch noted the significance of the proposal in a Jan. 29 post on X,  writing :

“Just to put this into perspective: These BTC purchases alone would be equivalent to around 5.3 months of newly mined Bitcoin supply.”

International reserves, CNB. Source:  André Dragosch

While Bitcoin is an interesting asset “worth considering” for a large portfolio, the board of the bank will need to provide “thoughtful analysis,” before making its final decision, wrote Michl in a Jan. 29 X  post .

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Still, Bitcoin remains  pressured by ongoing trade tensions  between the US and China, according to Vugar Usi Zade, chief operating officer at Bitget.

“While this headwind remains in the market, with President Trump eyeing more tariff hikes in the coming weeks, Bitcoin has traded with resilience,” Zade told Cointelegraph.