Czech National Bank Plans to Invest 5% of Its €140 Billion Reserves into Bitcoin

Governor Ales Michl sees Bitcoin as a high-return diversification option despite its price volatility. Bitcoin's 144% YTD surge and ETF adoption make it attractive

The Governor of the Czech National Bank (CNB), Ales Michl, is planning to invest 5% of the country’s reserves of €140 billion ($146.13 Billion) into Bitcoin. This could make the CNB the first major Western central bank to hold crypto.

With Bitcoin is now ranked 7th among the world’s top assets, having a market cap of $2 trillion, which makes BTC a crucial asset for central banks to invest in.

Why Is the CNB Interested in Bitcoin?

Ales Michl sees Bitcoin as a way to make the CNB’s reserves more diverse. Traditionally, central banks stick to safe investments like U.S. government bonds. But Michl, with his background in investment, believes that Bitcoin could offer high returns.

Although Michl recognizes Bitcoin’s risk due to its “extreme volatility,” he also sees its growing popularity, especially after companies like BlackRock started offering Bitcoin exchange-traded funds (ETFs).

Looking at the Bitcoin Year-to-date performance, it has seen a surge of almost 144% with its price hitting an ATH of $110k.

If Michl’s proposal is approved, the CNB could be leading the way for other central banks to consider Bitcoin as part of their reserves.

Bitcoin’s Impact on Central Bank Reserves

With the CNB’s €140 billion in foreign reserves, a 5% investment in Bitcoin could have a big impact on the cryptocurrency market. Bitcoin’s price could rise or fall depending on how much the CNB decides to invest.

So far, the CNB has already invested in stocks, and Bitcoin could be the next step in diversifying its holdings.

Could Other Central Banks Follow?

Michl further suggests that other central banks might start looking into Bitcoin in the next few years. While Bitcoin is still seen as risky by many central banks, some commercial banks and pension funds have started to include cryptocurrencies in their portfolios.

He also believes that Bitcoin’s rising popularity among individual investors, as well as institutional interest, could help the digital currency grow in value.

Michl’s Views On Monetary Policy

Along with his views on Bitcoin, Michl also has strong opinions about the Czech Republic’s currency. He thinks having control over the country’s monetary policy allows the Czech Republic to handle inflation and other financial challenges more effectively.