The US Department of Treasury, in its Fiscal Year 2024 Q4 report, highlighted Bitcoin’s rapid growth and its use case in the world of DeFi. The department acknowledged Bitcoin as a digital gold, emphasizing its role as a store of value in the digital asset market. The report noted the increasing trend of digital asset growth and usage, driven by native crypto coins like Bitcoin and Ethereum, as well as stablecoins.
Bitcoin, often referred to as “digital gold,” has seen significant growth in its market cap over the years. Starting with a market cap of $6.4 million in 2015, Bitcoin’s market cap has now reached $2.3 trillion, with the price recently crossing the $100,000 milestone. Institutional FOMO is on the rise, with more companies looking to embrace Bitcoin as an asset on their balance sheet.
Stablecoins were also highlighted in the report as another category of digital assets experiencing rapid growth. The US Treasury noted that stablecoin growth has led to increased demand for short-dated treasuries, with $120 billion in stablecoin collateral directly invested in Treasuries. Stablecoins play a crucial role in facilitating transactions in digital asset markets, with over 80% of all crypto transactions involving a stablecoin.
Institutional sponsorship of Bitcoin has been growing in recent years, with examples like BlackRock ETF and MicroStrategy leading the way. The report mentioned that crypto assets have been behaving like “high beta” assets, indicating significant volatility. This rapid growth and volatility may lead to future hedging needs and an increase in demand for Treasuries as a safe haven asset.
Overall, the US Treasury report underscores the growing importance of Bitcoin and digital assets in the financial market. With Bitcoin being compared to gold and stablecoins playing a pivotal role in digital transactions, the future of the digital asset market looks promising. As more institutions and companies embrace Bitcoin and other digital assets, the market is expected to continue its growth trajectory.