Dollar as Reserve Currency & Bitcoin’s Role: Future Outlook 2025 | US vs Russia Analysis

1 Oct, 2025
| Salome K

How much longer will the dollar last as the main and, perhaps, the only reserve currency… and is there a place for bitcoin in the lineup of contenders for the status of a reserve currency

Based on the monitoring of information, including analytical reports, scientific publications, and news digests, it can be concluded that the topic of converting national reserves into bitcoin is extremely debatable. Although the hypothesis of a change in reserve currencies has historical grounds, the forecast of a mass transition of countries to crypto-assets in the coming decade faces a number of fundamental obstacles.

Historical Cycles and Modern Trends

Historical analysis shows that the status of the main reserve currency is indeed not eternal. As noted in research, each such currency held leadership for about 80-100 years, and their change was usually accompanied by the weakening of the issuing state as a result of major shocks, such as wars. The pound sterling, which 100 years ago dominated 80% of international settlements, yielded its position to the US dollar after two world wars that seriously undermined the UK’s economy.

As for modernity, the dominance of the dollar is indeed gradually weakening. According to the IMF, its share in international reserves is declining, but the key point is that these positions are being taken not by other major currencies (euro, yen, pound), but by so-called “non-traditional reserve currencies” (Australian and Canadian dollars, yuan, won, etc.), as well as gold. This testifies not to a revolutionary leap, but to an evolutionary movement towards a more diversified, multi-currency system. As experts note, the global currency system is inertial and changes over decades.

Bitcoin as a Reserve Asset: Arguments “For” and “Against”

Skepticism regarding bitcoin as an asset for reserves is shared by many experts. The arguments can be structured as follows.

Arguments of supporters:

Decentralization and protection from sanctions: The main thesis is that bitcoin, being a decentralized asset, cannot be frozen or confiscated by any government. This is especially relevant for countries seeking to reduce risks from using the dollar in light of its “weaponization of the dollar,” for example, through disconnection from SWIFT.

Predictable emission: The fixed limit of 21 million coins protects bitcoin from inflation caused by unlimited emission, which is inherent to fiat currencies.

Critical obstacles (and why China and Russia are unlikely to soon convert trillions into BTC):

Volatility: The main argument against is the extreme volatility of the exchange rate. For a reserve asset that must preserve value and ensure the stability of the financial system, such fluctuations are unacceptable. As one economist aptly noted, the value of bitcoin strongly depends on the “statements of any elderly American idiot,” making it an unreliable store of value for the state.

Lack of legislative recognition: A scientific article from IMEMO RAS emphasizes that crypto-assets are used mainly for speculation and rarely for international payments. Moreover, in many large countries, their use as a means of payment is legally prohibited. Converting reserves into bitcoin would directly contradict the official policy of China, where the circulation of cryptocurrencies is strictly limited.

Threat to currency sovereignty: For countries such as China and Russia, which are pursuing a policy of de-dollarization, a transition to bitcoin would mean replacing dependence on the US dollar with dependence on a decentralized asset beyond their control. A much more logical strategy seems to be the promotion of national currencies in international settlements and the accumulation of gold—a real asset that historically plays the role of a “safe haven” and carries no counterparty risks. As rightly noted, gold is already showing growth (the price has increased by 44% since the beginning of 2025), and its share in reserves continues to increase.

A Pragmatic Alternative: Evolution, Not Revolution

Thus, the forecast of a soon mass conversion of reserves into bitcoin seems extremely unlikely. Instead of a revolutionary paradigm shift, we are observing a cautious but steady trend.

Diversification, not replacement: Central banks, including the Central Bank of the Russian Federation and the People’s Bank of China, will not “put all their eggs in one basket.” Their strategy is diversification. They are gradually reducing the share of the dollar, building up gold reserves and increasing the share of other currencies, including the euro, yuan, and currencies of partner countries.

Development of own digital assets: A more realistic scenario is the development of central bank digital currencies (CBDC). China is already actively testing the digital yuan. Such assets combine the technological advantages of digital payments with state guarantees and control, which fully corresponds to the interests of sovereign states.

To date, bitcoin remains more of a speculative asset and a risk hedging tool for private investors, but not for central bank managers of multi-trillion reserves. Their path is pragmatic diversification and strengthening of their own financial systems, not a bet on “murky numbers.”

The analysis shows that the discussion about the role of bitcoin at the state level is very active, but the approaches of the key players—the USA and Russia—differ drastically.

Two Approaches to Bitcoin at the State Level

The views of the USA and Russia on the possibility of using bitcoin as a reserve asset demonstrate fundamentally different philosophies.

– USA: Formation of a reserve based on confiscated assets. The US administration is making a pragmatic bet on the creation of a Strategic Bitcoin Reserve without direct purchases of cryptocurrency using budget funds. The initiative, signed by President Donald Trump, involves the formation of a reserve from bitcoins confiscated by federal agencies in the course of criminal cases (for example, during the hack of the Bitfinex exchange). The volume of such assets under the control of the authorities is estimated at 200-208 thousand BTC (worth over $20 billion). However, the process is accompanied by delays: the audit of the reserve, scheduled for April 2025, had not been conducted at the time of publications, and a significant part of the funds remains at the stage of seizure and may be returned to the legal owners.

– Russia: Recognition of profitability while denying reliability. The Bank of Russia has taken a more conservative and clear position. On the one hand, the regulator in 2025 included bitcoin in its financial market risk review for the first time, recognizing it as the most profitable financial asset of the past year, whose yield exceeded the indicators of stocks, bonds, and gold. Analysts of the Central Bank noted the perception of bitcoin as “digital gold” and a tool for hedging inflationary risks. On the other hand, the Chairman of the Central Bank, Elvira Nabiullina, categorically stated that the central bank does not consider bitcoin and other cryptocurrencies as a reserve asset due to their high volatility and risks. The official position is to prohibit the use of cryptocurrencies as a means of payment within the country, while allowing them for investments by qualified investors and in experimental regimes for international settlements.

Risks and Criticism of the Idea of National Bitcoin Reserves

The initiative to create state bitcoin reserves faces serious criticism based on fundamental economic principles.

– Speculative nature and risk to the budget. Critics, such as the authors of Bloomberg, point out that bitcoin has no intrinsic value, no industrial application, and does not generate cash flows. Its price depends solely on supply and demand. The purchase of cryptocurrency with taxpayers’ money to form a reserve does not serve a public purpose and is associated with a high risk of losses for the state.

– Threat to financial stability. Allowing financial institutions to use bitcoin as collateral can create systemic risks. In the event of a collapse in the cryptocurrency’s exchange rate, this could provoke a chain reaction and threaten the stability of the entire banking system.

– Contradiction with the original principles. The idea of a state reserve contradicts the original philosophy of bitcoin as a decentralized system, independent of governments and intermediaries. And the lobbying by crypto exchanges for state programs looks like an attempt to get a huge subsidy.

Summary: Evolution through Diversification, Not Revolution through Bitcoin

The analysis of current data confirms the initial thesis: a mass conversion of national reserves into bitcoin is unlikely in the foreseeable future.

– The path of Russia and China is diversification into gold and national currencies. The BRICS strategy, including Russia and China, is aimed at de-dollarization by building up gold reserves and promoting settlements in national currencies. This is an evolutionary and predictable path that corresponds to the goals of financial sovereignty.

– The US experiment is cautious boundary testing. The US approach is not so much a replacement for gold and currency reserves as it is the creation of an additional pool of high-risk assets on a gratuitous basis. This is an experiment, the consequences of which have yet to be assessed.

– The real alternative is CBDC. A more realistic scenario for the development of state digital finance is the development of central bank digital currencies (CBDC), which combine technological advantages with state control.

Thus, bitcoin continues to be an important, but speculative asset on the periphery of the official financial system. The arguments of the skeptics, based on volatility and regulatory obstacles, look more weighty for reserve managers than the arguments of the enthusiasts.

This analysis well shows the current moment: bitcoin has made central banks think about the future of reserves, but has so far offered not a ready-made solution, but only a new set of risks and opportunities for discussion.