Czech Central Bank Proposes Allocating 5% of €140B Reserve to Bitcoin

From cypherpunks to retail traders to nation-states, Bitcoin’s journey has been revolutionary. Once dismissed by traditional institutions, Bitcoin is now impossible to ignore.

Institutions that once ignored it are now exploring its potential, while doubters are turning into adopters. The rules of money are being rewritten, and Bitcoin is at the center of the transformation. What was once an alternative is fast becoming a necessity as individuals and companies wake up to the power of Bitcoin to beat the inflation of fiat currencies around the globe.

Czech National Bank, A New Contender for A Bitcoin Reserve

Central banks have been cautious about Bitcoin for several years. They have treated it as a speculative asset rather than a legitimate reserve. While companies like MicroStrategy and institutional investors have embraced it, sovereign financial institutions have largely kept their distance. However, the trend may be changing as global inflation concerns and shifting monetary policies push central banks to explore new ways to diversify their holdings.

Bloomberg reports the Czech National Bank’s Governor’s interest in Bitcoin. Source: X

This has led to today’s major development. Czech National Bank Governor Aleš Michl has informed the population that he will present a plan to the board to invest in Bitcoin as part of a broader strategy to diversify the Czech National Bank’s reserves. He stated that if the proposal is approved, the CNB could allocate up to 5% of its €140 billion reserves into Bitcoin, making it the first Western central bank to officially buy and hold crypto assets.

The Czech Republic buying Bitcoin would be a historic event for Bitcoin. Based on the 5% allocation of its €140 billion holdings, the Czech Republic would add roughly 74,851.49 Bitcoins to its national reserves.

With Trump in Office, the Bitcoin Arms Race Kicks-Off

With Trump hinting at making Bitcoin a strategic reserve asset, nations have started to act. The Czech Republic is the first to react, looking to seize the early mover advantage with its proposal to allocate 5% of its €140 billion reserves into Bitcoin. This bold step signals the beginning of a new financial era, where nation states are no longer just observing Bitcoin’s rise but actively integrating it into their monetary policies. Over the coming years, the global financial landscape could revolve around digital gold, with Bitcoin at the center of reserve strategies, economic security, and geopolitical power plays.

It has begun. Which nation-state will be the first to pull the trigger and buy Bitcoin?

The latest data shows government-held Bitcoin reserves exceeding 529,000 BTC, with the United States, China, and the UK leading the race. Now, with the Czech Republic stepping in, the pressure is mounting on other nations to secure their share before it’s too late. Bitcoin, which is currently at the $100K level, is gaining serious interest from federal reserves, and national acquisitions could unlock unprecedented demand.

This shift could drive Bitcoin’s price to new highs in the coming years, cementing its role as a geopolitical asset. With Trump’s administration likely to accelerate adoption, Bitcoin’s integration into institutional and sovereign reserves is no longer a question of if, but when.

Current Government Bitcoin Holdings. Source: Bitbo

Bitcoin Game Theory for Nation States

The game theory of nation-states and Bitcoin suggests that those who act first to buy Bitcoin as a strategic reserve will gain a significant advantage, while those who hesitate risk being left behind. This concept is driven by several key dynamics:

1. First-Mover Advantage in a Fixed-Supply Asset

Bitcoin has a hard cap of 21 million coins, meaning it is a scarce strategic asset. As more nation-states adopt Bitcoin, demand increases, but supply remains fixed, causing early adopters to accumulate Bitcoin at a far lower cost than latecomers.

• The first countries to accumulate Bitcoin will do so at a fraction of the future price, gaining a massive capital advantage when Bitcoin appreciates.
• Late adopters will have to buy from early movers at exponentially higher prices, reducing their purchasing power and economic influence.

2. Game Theory Incentivizes Preemptive Adoption

This is a classic prisoner’s dilemma scenario:

• If one country accumulates Bitcoin while others wait, the first country gains an edge.
• If multiple countries accumulate, they all benefit but in proportion to their speed and conviction.
• If no country accumulates, they all miss out on a once-in-history asymmetric bet.

Since Bitcoin is permissionless and unstoppable, every country knows that any other country could be secretly accumulating Bitcoin. This creates a strategic arms race, pushing nation-states to act first or risk being last.

3. Geopolitical & Monetary Shifts Favor First Movers

Bitcoin competes directly with the U.S. dollar and traditional reserve assets (gold, bonds, forex reserves). The first countries to transition some of their reserves into Bitcoin will benefit in several ways:

• Hedge against dollar debasement: Countries relying on the USD risk inflation-driven devaluation. Bitcoin provides a neutral, apolitical store of value.
• Strengthened monetary sovereignty: Nations without strong currencies (e.g., Argentina, Turkey) gain an alternative that is outside U.S. control.
• Sanctions resistance: Bitcoin allows countries to bypass traditional financial systems dominated by Western powers (e.g., SWIFT).
• Lower-risk borrowing: Bitcoin-backed reserves could provide cheap international borrowing power.

Countries that delay will be forced to buy more expensive Bitcoin later, eroding their economic position.

4. The Hyperbitcoinization Feedback Loop

Once a few nation-states (especially larger economies) publicly announce Bitcoin accumulation, game theory accelerates:

• Legitimization: More states follow, treating Bitcoin as an official reserve asset.
• Price explosion: Demand spikes, and Bitcoin’s value skyrockets due to its inelastic supply.
• Wealth redistribution: Early adopters (countries, sovereign wealth funds) become wealthier, while latecomers pay exorbitant prices for Bitcoin or risk economic irrelevance.
• Geopolitical influence shift: Countries with strong Bitcoin reserves gain economic leverage over those without it.

This creates a domino effect, where nations rush to accumulate before it’s too late.

Who Will Act First?

• Countries with weak currencies (e.g., Argentina, Nigeria) are likely to be early adopters, as Bitcoin provides monetary stability.
• Authoritarian states (e.g., Russia, Iran) might adopt Bitcoin as a sanctions workaround.
• Resource-rich but financially unstable countries (e.g., Venezuela) might use Bitcoin to monetize natural assets.
• Forward-thinking, tech-savvy states (e.g., El Salvador) have already started accumulating and will reap first-mover rewards.

If a major power like China, Russia, or a G7 nation accumulates first, it could trigger a global race, leaving hesitant countries scrambling for ever-more expensive Bitcoin.

Conclusion: The Bitcoin Game Theory Says ‘Buy First or Lose’

The logic is simple: Bitcoin’s scarcity, nation-state competition, and geopolitical incentives mean that early adopters will win disproportionately. Countries that act first will benefit from cheaper Bitcoin, financial sovereignty, and long-term geopolitical leverage, while laggards will be forced to buy at higher prices or risk economic decline.

The rational strategy? Buy Bitcoin now, before the game theory kicks into high gear.

Bitcoin Price Analysis

Bitcoin is currently trading within an ascending triangle pattern on the daily time frame, signaling potential breakout opportunities in days to come. Since December 2024, Bitcoin has remained in consolidation, lacking a definitive trend as the price fluctuates within the formation. However, with the triangle now converging, a breakout appears closer.

Bitcoin inside an ascending triangle pattern. Source: Trading View

While the pattern maintains a bullish bias, confirmation remains crucial for validating the breakout and reinforcing bullish momentum. The resistance zone between $106,800 and $108,500 has consistently rejected upward moves, preventing a sustained rally. If bulls can successfully initiate a breakout above this level, the price is expected to surge higher towards the $113,340 level, primarily with a potential next upside target of $120,070.

On the downside, Bitcoin has found solid support around the $100,000 level, with bulls successfully defending it for nearly two weeks, preventing any price movements below. As long as this support holds, bulls retain control of the trend. Meanwhile, the trendline support between $95,000 to $93,500 levels is the key region to monitor as a drop below this zone could increase selling pressure, potentially leading to a deeper correction.