The Department of US Treasury, in its Fiscal Year 2024 Q4 report, has emphasized Bitcoin’s rapid growth discussing its use case, especially in DeFi. Remarkably, it also acknowledged Bitcoin as a digital gold.
It noted the trends in digit asset growth and usage which has undergone a rapid growth from very low levels. It noted that growth has come both from native crypto coins like Bitcoin and Ethereum, as well as stablecoins.
A Store Of Value In The World Of Defi
According to the US Department, the primary use case for BTC, which they also referred to as “digital gold,” seems to be a store of value in the DeFi world. It underscored that the speculative interest seems to have played a prominent role in the growth of digital tokens thus far.
Recently, the Fed Chair Jerome Powell also likened Bitcoin to gold as he compared both assets. Jerome Powell said that BTC is a speculative asset that has a closer correlation to gold than the US dollar.
The report also noted Bitcoin’s market cap over the years. In 2015, the flagship crypto had a market cap of $6.4 million. In 2019, it grew to $194 billion. Currently, Bitcoin boasts a market cap of $2.3 trillion. The Bitcoin price is not showing signs of stopping anytime soon, as it recently crossed the $100,000 milestone. Analysts note that Bitcoin’s success is driving institutional FOMO as more companies are looking to embrace it as an asset on their balance sheet.
Stablecoin Growth
The US Treasury report also highlighted stablecoins as another category of digital assets that have seen rapid growth. The report stated that stablecoin growth has resulted in a modest increase in demand for short-dated treasuries.
Fiat-backed stablecoins are said to have a significant portion of their collateral in the form of treasury bills and treasury-backed repo transactions. The US Treasury estimates that $120 billion in total stablecoin collateral is directly invested in Treasuries.
It also noted that Stablecoins play an integral role intermediating transactions in digital asset markets. Over 80% of all crypto transactions now use a stablecoin as one leg of the transaction. Over the near term, the US department expects continued growth in stablecoin markets along with the overall size of the digital asset market.
“The High Beta Assets”
The report also mentioned that in recent years, institutional sponsorship of Bitcoin citing instances of BlackRock ETF and MicroStrategy, has been growing and crypto assets have behaved like “high beta” assets. Further, they also predict that the rapid growth of Bitcoin and other digital assets and massive volatility might lead to future hedging needs and fight-to-quality demand for Treasuries.
