A potential gold revaluation could see the U.S. Treasury buying bitcoin sooner than expected

Happy Tuesday! A potential gold revaluation could see the U.S. Treasury buying bitcoin sooner than expected, Coinbase Asset Management President Sebastian Bea told The Block

A potential gold revaluation could see the U.S. Treasury buying bitcoin sooner than expected, Coinbase Asset Management President Sebastian Bea told The Block on the latest episode of The Scoop podcast.

The Block's Hannah Sassmannshausen spoke with Bea on the latest installment of the flagship cryptocurrency podcast. Together, they discussed a wide-ranging topic, beginning with the potential implications of gold's role in the global financial system.

"If you look at the price of gold over the last 40 years, it's essentially flat in real terms. It's buying less today than it was buying in the 1980s, and I think that's becoming problematic," Bea said.

He highlighted how the purchasing power of gold has dwindled significantly since the 1980s, leading to concerns about the durability of the existing financial system. According to Bea, this persistent issue might prompt authorities to revalue gold, which in turn could domino into Treasury direct bitcoin purchases.

"If you look at the purchasing power of gold today versus the 1980s, it's buying less than half. I think there are clear signs that the durability of the existing financial system is being called into question. And I think that's pushing towards some form of gold revaluation. If they do decide to revalue gold, which I think is a strong possibility, I think that would likely trigger some form of U.S. Treasury direct bitcoin purchases," Bea explained.

Highlighting the interconnected nature of the global financial landscape, Bea suggested that a move by the Treasury would be pivotal in mobilizing other institutions to engage with bitcoin.

"I think once the Treasury starts buying, you'll quickly see other institutions following suit," he added.

The interview also touched upon the growing interest in bitcoin from sovereign wealth funds (SWFs). Bea shared his perspective on why SWFs, which manage vast sums of money for a country's wealth, are turning towards bitcoin in recent times.

"I think there's a clear interest from sovereign wealth funds in bitcoin. If you look at the time scales that SWFs operate on, they're thinking in 20- to 30-year time frames, which is quite different from how hedge funds operate. They're evaluating the long-term trends, and they're seeing that bitcoin is performing exceptionally well in relative terms over the last 10 to 15 years," Bea explained.

He highlighted how this performance, especially compared to traditional assets like the stock market, is making bitcoin an attractive investment for organizations like SWFs that prioritize long-term outperformance.

"They're seeing that bitcoin is outperforming the stock market, especially in real terms, and I think that's a key driver for their interest," Bea concluded.

The interview provides interesting insights into the evolving dynamics of the cryptocurrency market and the growing institutional interest in bitcoin. As the purchasing power of gold diminishes and the existing financial system faces scrutiny, it will be interesting to observe whether this pushes towards a gold revaluation and, consequently, U.S. Treasury involvement in bitcoin.