The Uncomfortable Ascent of Digital Gold: Bitcoin and the Shifting Financial Landscape

While Bitcoin is reaching new all-time highs (ATH), citizens of the United States are pondering how to acquire even more of this digital gold. In this quest, many are prepared to part with a portion of their precious metal reserves.

Over the past decade, the Volatility Index (VIX) has entered panic territory eight times. The peak during the COVID-19 pandemic reached an alarming 80, surpassing the record set during the 2008 financial crisis.

Often referred to as the «fear index,» the VIX predicts future volatility in the S&P 500 stock market by analyzing options data from the Chicago Board Options Exchange (CBOE). It effectively illustrates potential sharp fluctuations in the market capitalization of the 500 largest international companies.

The US dollar is also showing concerning signs. The USD index chart since the end of 2022 increasingly resembles the onset of a historic decline — a reversal that began from the peak in 2002 and continued through the 2008 crisis.

Such trends do not inspire investor confidence and highlight an impending shift in the dynamics of global finance.

Government bonds, once considered a safe haven during stock market downturns, are currently facing tough times. However, they remain part of investment portfolios of top executives and partially back certain stablecoins like USDT. Since 2021, these financial instruments have struggled to reverse the bearish trend.

These alarming signals, alongside macroeconomic and geopolitical shifts, have led experts to pen entire books on alternative saving methods, constantly reminding investors of the importance of precious metals and digital assets.

Ray Dalio, the founder of the prominent hedge fund Bridgewater, has frequently remarked at conferences:

*“If you don’t own gold, you don’t understand history or economics.”*

This sentiment is echoed by Peter Schiff, president of Euro Pacific Capital and a critic of Bitcoin, and Michael Burry, the investor who predicted the 2008 financial crisis.

The strategic addition of Bitcoin to the national reserve funds of various nations has pointed millions toward the future trajectory of the global financial system. A significant question arises: will there still be a place for the dollar in this system, and what will money look like in five years’ time?

The trend of incorporating Bitcoin into investment portfolios of less wealthy companies is gaining momentum, with updates about maintaining this trend surfacing more frequently than once a week.

As the first cryptocurrency leads the pack of altcoins, it has become a tool for political and economic speculation. The correlation with the traditional financial system has reached notable levels; one need only recall the cryptocurrency market’s reaction to recent statements from Donald Trump or reports from the Federal Reserve.

While the much-anticipated «Nakamoto future,» in which 1 BTC equals 1 BTC, has yet to unfold, individuals face the decision of how to hold their capital. With fluctuations ranging from approximately $50,000 to $250,000, some alternative and reassuring factors will be necessary for the next five to ten years of recalibration. Thus, gold remains a viable option.

The demand for converting Bitcoin into gold is already evident. As major banks open pathways for purchasing the first cryptocurrency, US citizens are ready to exchange their precious metal for BTC.

A recent survey revealed that four out of five Americans are willing to convert part of the nation’s gold reserves into Bitcoin. The Nakamoto Project surveyed 3,345 respondents, most of whom prefer to convert up to 30% of their gold. The average sampling is open to 10%, while the younger generation (under 35 years old) displays the greatest enthusiasm for owning Bitcoin.

Now let’s consider which countries and companies are accumulating these two assets at a faster pace than others.

In recent years, crypto companies have aggressively purchased Bitcoin. However, they still lag behind Strategy’s leader, MicroStrategy, which holds over 580,250 BTC. Following closely is the second-ranked miner, MARA, with approximately 49,230 BTC, while Metaplanet rounds out the top three with its 8,888 BTC.

For the third consecutive year, central banks worldwide have acquired more than 1,000 tons of gold for their reserves: in 2024 they purchased 1,045 tons, in 2023 — 1,037 tons, and a record 1,082 tons was set in 2022.

Central banks continue to lead in net gold purchases, with Uzbekistan, China, and Kazakhstan making the top three largest buyers. Additionally, Poland and India are also increasing their gold reserves, with both central banks adding three tons each to their holdings in January 2025.

This pace could indicate that countries are rapidly preparing for a transitional process in the global economy.

Former CIA and Pentagon advisor and author of «The New Case for Gold,» Jim Rickards, refers to gold stored away from one’s possession as «paper gold.» He warns that in times of crisis, government entities might freeze or seize it.

Many nations have repeatedly asked for repatriation of their reserves but have faced significant challenges in doing so.

In the 1960s, French President Charles de Gaulle demanded that the US return France’s gold reserves, fearing that the US balance of payments deficit could lead to the collapse of the Bretton Woods system and the devaluation of the dollar.

Consequently, France launched the secret operation Vide-Gousset, successfully repatriating 3,313 tons of gold reserves from vaults in New York and the Bank of England in London between 1963 and 1966. In February 1965, de Gaulle publicly declared his intention to exchange France’s dollar reserves for gold at the official rate and sent a fleet across the Atlantic to retrieve the nation’s holdings.

France’s actions significantly pressured US reserves and contributed to President Richard Nixon’s decision in 1971 to sever the dollar’s link to gold, marking the end of the Bretton Woods system.

Countries storing their gold abroad:

For most Western residents, there is limited access to investment in physical gold. Buyers often face either hefty taxes or bureaucratic hurdles.

The situation is different in Asia. In India, the low purchasing tax stands at 3%, and the import duty was reduced from 15% to 6% in 2024. In China, standard gold sold through the Shanghai Gold Exchange is exempt from VAT.

Thailand supports free trade but introduced a 7% VAT on all imported goods, including gold, effective July 5, 2024, regardless of their cost. Within the country, precious metals can be purchased in numerous jewelry stores and licensed dealers. The standard purity level is 96.5% (23 karats), and they are often sold in the form of ornaments, bars, or coins.

In Dubai, there is a zero import duty on gold, along with a 5% VAT on its sale. In Saudi Arabia, gold with a purity of 99% and higher intended for investment is exempt from tax. Qatar imposes no taxes on transactions involving precious metals.

In some countries, relatively high VAT rates apply to bullion purchases. For instance, in Japan, the rate is 10%.

As the crypto community awaits the next Bitcoin highs, the Federal Reserve is planning its next move. What this will entail remains uncertain, but the drastic policies of US President Donald Trump present increasing opportunities for record highs in the VIX index and an acceleration of transformations.

Cryptocurrency market volatility can easily wipe out around 40% of accumulated value within a single day. For large capital investors playing the long game, short-term prices are of little concern. During downturns, large investors buy back the assets sold by panicking small investors. The «big money» sells it in smaller portions during price increases and repurchases at lower costs.