Fidelity Digital Assets predicts that 2025 will mark a pivotal year for Bitcoin as governments and central banks increasingly turn to the cryptocurrency as a strategic asset to counteract rising inflation, currency devaluation, and expanding fiscal deficits.

According to Fidelity’s latest report, the company anticipates that more countries, sovereign wealth funds, and financial institutions will recognize Bitcoin as a viable hedge and begin to allocate it to their reserves. Analyst Matt Hogan emphasized, “In the current economic climate, where inflation is escalating and traditional currencies are under pressure, holding Bitcoin may soon be regarded as less risky than not holding it at all.”

The report highlights growing political support in the U.S. for Bitcoin, with figures such as President-elect Donald Trump and Senator Cynthia Lummis advocating for the establishment of a Bitcoin reserve. While the details of these proposals remain uncertain, Fidelity speculates that if the U.S. moves forward with a Bitcoin reserve strategy, it could set off a global domino effect, forcing other countries to follow suit.

Lummis’ proposed “Bitcoin Act of 2024” could be a crucial piece of legislation, according to Fidelity, which suggests that if passed, it would create a competitive political and financial environment, compelling other nations to accumulate Bitcoin as part of their fiscal strategy.

In its report, Fidelity also suggests that if countries do begin purchasing Bitcoin, they will likely do so quietly to avoid market disruptions. Announcing large purchases could cause a price spike as speculative investors rush in, making the acquisition more expensive.

As of now, the U.S., China, the U.K., Ukraine, Bhutan, and El Salvador are known to be among the largest government holders of Bitcoin, though most of these holdings were acquired through government seizures or the recovery of criminal assets rather than strategic purchases. Fidelity’s analysis suggests that more governments could follow this path in the near future as Bitcoin becomes an increasingly attractive alternative to traditional financial instruments.