The Czech National Bank (CNB) recently confirmed that it is assessing Bitcoin as a national reserve asset. This Bitcoin assessment by Czech policy makers is majorly aimed at evaluating how Bitcoin can come to foster economic stability in the Czech Republic (Czechia).
Financial Times reported earlier that Czech central bank’s Governor Aleš Michl, is at the forefront of the potential $7 Billion Czechia BTC Reserve. With discussions set to happen today (Jan. 30, 2025), Czech could become one of the first countries to hold BTC as part of its national reserve if approved.
However, Michl highlighted that the prospected BTC adoption at national reserve level is only at the analysis stage and there is no immediate plan on the table yet. He wrote, “right now, it’s only at the stage of analysis and discussion. The Bank Board decides, and no decision is imminent.”
Bitcoin has managed to reclaim the $105K mark today as CNB evaluates allocating 5% of foreign reserves for diversification and economic hedging.
CNB Considers Bitcoin as a Potential Reserve Asset
Economic stability has become the main focus of Michl following his July 2022 appointment as the governor of CNB. Before his tenure, Czechia had experienced massive inflation for over three decades. When he took office in 2022, inflation was at its peak standing at 17.5% during that year.
The governor has however managed to implement new measures to modify the CNB reserve strategies. This has made CNB expand its gold holdings 0% to 5%. CNB has also shifted to a model allocating 30% of reserves to equity investments predominantly in the U.S.
With the recent plan to adopt up to 5% of foreign reserves to Bitcoin, Czech National Bank is championing diversification of its holdings. Nonetheless, the national bank is aware of the volatility of Bitcoin which could challenge how the crypto is adopted by central banks.
Ales Michl stated, “Bitcoin has significant volatility, which makes it harder to take advantage of its current low correlation with other assets. That’s why I will ask our team on Thursday to further assess Bitcoin’s potential role in our reserves. Nothing more, nothing less.”
How Has Bitcoin Reacted To The CNB Reserve News?
Bitcoin is on an upward trend today, with over 2% on the day. As of the time of writing, BTC was trading at 105,161.02 according to live data on TradingView.
As per the chart above, the immediate support lies at the $104,754.17 mark while immediate resistance stands at $105,534.33. If BTC manages to push past the immediate resistance, prices could surge towards the $110,000 mark.
However, price movement below the immediate support may result in short-term selling pressure. This will further risk a breach of the next key support level which lies around the $103,200 mark.
Bitcoin is viewed as a reserve asset in many countries including the US and now the Czech Republic. Additionally, several US states including Arizona are considering adding BTC to their portfolio. If Aleš Michl’s push for 5% investment in BTC gets a greenlight from policy makers, BTC’s price might soar to immense heights.