The Swiss National Bank has rejected holding bitcoin reserves, citing concerns over cryptocurrency market liquidity and volatility.

“For cryptocurrencies, market liquidity, even if it may seem ok at times, is especially during crises naturally called into question,” said SNB President Martin Schlegel at the bank’s General Assembly meeting Friday.

“Cryptocurrencies also are known for their high volatility, which is a risk for long term value preservation. In short, one can say that cryptocurrencies for the moment do not fulfill the high requirements for our currency reserves.”

Schlegel’s comments were prompted by the Bitcoin Initiative, a bitcoin advocacy group whose research demonstrates that adding bitcoin to Switzerland’s treasury would complement its overall portfolio and yield substantial return with minimal volatility. 

Without bitcoin, the Swiss National Bank’s investments grew by about 10% since 2015. A 1% bitcoin allocation to the central bank’s portfolio would have nearly doubled returns over the same period, according to a Bitcoin Initiative portfolio simulation. Annualized volatility would have increased only slightly.

The Bitcoin Initiative emphasized that bitcoin’s volatility should not be evaluated in isolation, but in terms of its influence on the overall dynamics and performance of the investment portfolio.

“[Bitcoin] price reached new highs, it showed resilience under market stress, and it continues to be highly liquid with trading volumes in the double digit billions, every day and night, even on bank holidays,” said Luzius Meisser, a member of the Bitcoin Initiative and board member of Bitcoin Suisse.

“The Bitcoin network remains one of the most reliable and secure IT systems ever created. And most remarkably, the United States has started a strategic bitcoin stockpile.”

In an emailed statement to CoinDesk, the Bitcoin Initiative suggested the Swiss National Bank’s aversion to bitcoin might be political, as it could be perceived as “an expression of distrust towards other currencies” and harm delicate relations between Switzerland and the European Union.

European Central Bank President Christine LaGarde has consistently criticized bitcoin, calling it “worth nothing” and a “highly speculative asset” linked to money laundering. In January, Lagarde said “I’m confident” that “bitcoins will not enter the reserves of any of the central banks of the General Council” of the ECB.

That was in response to comments made by Czech National Bank Governor Ales Michl that his institution was evaluating adding bitcoin to its reserves. LaGarde argued that bitcoin fails to meet the ECB’s criteria for liquidity, security, and safety from criminal associations.

In February, Poland’s central bank ruled out “keeping reserves in bitcoins under any circumstances” and the Romanian central bank warned banks not to issue loans to crypto companies.

Federal Reserve chair Jerome Powell said in December 2024 that the U.S. central bank was “not allowed to own bitcoin” per the Federal Reserve Act and it’s not looking to change the law.

The Swiss National Bank has indirect bitcoin exposure through stocks that own corporate bitcoin treasuries, including 520,000 shares of Strategy, 8.12 million shares of Tesla, 580,000 shares of MARA Holdings, and 500,000 shares of CleanSpark, as of the end of 2024 according to Fintel data.

Schlegel rejected citizen calls to add bitcoin reserves to the Swiss central bank’s coffers as recently as last month. When it comes to technological advancements, Schlegel noted Thursday that the SNB is running a pilot project using central bank digital currencies to facilitate payments between financial institutions.

By contrast, U.S. President Donald Trump signed an executive order this year that establishes a strategic bitcoin reserve and crypto stockpile, along with a Crypto Council that will evaluate budget neutral ways to supplement U.S. digital reserves. The order further prohibits government agencies from creating or promoting a central bank digital currency in the United States out of privacy concerns for citizens.

According to the Bitcoin Reserve Monitor, 20 states have pending Strategic Bitcoin Reserve (SBR) legislation. As bullish as these efforts seem, they may be overshadowed by a sweeping federal framework pushed by Senator Cynthia Lummis, now the head of the Banking Subcommittee on Digital Assets.

After 16 years of speculation, experimentation, block wars and debanking, it seems that Bitcoin is on the precipice of a major threshold. Bitcoin’s inflation rate is already lower than 1% and its 21 million BTC scarcity serves as a bulwark against inevitable currency erosion by the world’s central banks.

Perhaps most importantly, Bitcoin’s ledger can be easily verified by everyone, unlike gold reserves. These and other factors are clearly positioning Bitcoin as the premiere retirement asset, one that is highly resistant to tampering by central planners.

But what would leveraging Bitcoin for retirement actually look like? First, we need to examine the importance of the very fact that BSR is being discussed at such a high level.

BSR: The Final Perceptual Push?

At the end of the line, the ultimate resource for human structure to function is trust. It underpins not only interpersonal relations but large-scale societal systems. This is why narrative control, recently exposed by Elon Musk’s DOGE going through USAID funding, is so critical for governance systems regardless of what they are labeled as.

Although highly precious, trust is a fungible resource. For the purpose of social stability, if trust in fakery is achieved, it is as valuable as trust in truth. Yet, the former type of trust lacks resilience, necessitating ever-escalating levers of control. In turn, this makes managed trust more fragile.

Opposite to managed trust, we have Bitcoin as a trustless system. Paradoxically, Bitcoin represents the highest, most resilient form of trust management precisely because it minimizes subjective trust at the same time as it maximizes objective truth via its cryptography and proof-of-work mechanism.

At a glance, this would make Bitcoin the obvious choice as a store of value, right? Not so fast. Time and time again, surveys have shown that the older people are, the less trustworthy they are of Bitcoin and digital assets in general.

2023 Voice of the Investor study. Image credit: Morningstar

Why is that the case? Why would people with a greater experience pool be least trustful of the highest form of trust management like Bitcoin? Wouldn’t they welcome such major innovation?

That’s because reputational signaling overrides technical understanding. And for most people, technical understanding is not even attempted without the social push. In other words, for something to be adopted and integrated, it has to be sanctified by authority figures, lest it be constrained to the fringes.

The older demographic, specifically, relies on “greater reputation-related activity in mentalizing/memory areas while making their decisions” as shown from computational modeling in a 2023 study titled Age-related Differences in the Social Associative Learning of Trust Information.

Suffice to say, for the older demographic, the lowest common denominator mainstream media has been the primary purveyor and sanctifier of Bitcoin information. But because mainstream media is tightly interwoven with the government, as DOGE-powered revelations clearly show, the sanctification process starts and ends with the government.

This is why the potential Bitcoin Strategic Reserve is such a monumental threshold. It would signal trust in Bitcoin from the very top, which would then trickle down to sanctification layers that supply the older demographic with cues. Even if the MSM is inimical to the Trump admin, the existence of BSR would change the tone of Bitcoin coverage, forever.

As such, BSR should be understood as the final perceptual push that changes the Bitcoin landscape. The implications are already apparent.

Boomers vs Zoomers: Holders vs Strivers

Just as surveys show that younger generations are most likely to partake in digital assets, they also show that Gen Z is the least expectant to own a home. This is a major generational cleavage, effectively burying the so-called “American Dream”. But is that really the case moving forward?

What if BSR establishes new social signaling for the baby boomer generation? In that scenario, boomers would serve as (1946 – 1964) massive holders of wealth. Overshadowing both GenX (1965 -1980) and Millennials (1981 -1996), boomers hold an estimated $78.1 trillion, or 52% of US net wealth as of 2023.

On average, baby boomers have a net worth of $2.31 million, according to Terry Rawnsley, KPMG Urban Economist. In contrast, GenX has an average net worth of $1.88 million, Millennials at $757,000, while Gen Z is at the bottom of the generational pile at $96,000. 

If boomers take the reputational cue from BSR, just a small fraction of capital inflows into Bitcoin, custodial or non-custodial, would drastically shift BTC price. Wealth funds have already suggested above 1% BTC allocation for portfolios. 

VanEck puts the figure at 3%, while Standard Chartered’s Geoffrey Kendrick expects up to 5% allocation from sovereign wealth funds. Altogether, this would place the BTC price at $500,000 by 2028, elevating Bitcoin’s market cap to nearly $10 trillion.

In turn, even younger generations with meager holdings compared to boomers would build up a solid foundation for their retirement plans. And if Bitcoin gains the perception as the premiere retirement asset, this would be only the beginning of its appreciation.

Bitcoin: Performant Retirement Asset

In its simplest form, leveraging Bitcoin as a maturing asset can be done two ways. One way is to go the self-custody route by safeguarding access (wallet) to Bitcoin blockchain with offline storage. The other way foregoes the trustless nature of Bitcoin by counting on institutions with any of listed Bitcoin exchange-traded funds (ETFs) or crypto exchanges.

From then on, government spending and central banking do the work for BTC holders. As respective fiat currencies lose value, BTC receives inflows as a decentralized ledger backed up by a vast energy/computing network. 

So far, people have counted on equities, commodities or bonds to guard against USD erosion. From these basic elements, numerous combinations can be made to optimize for largest gains over time. Some invest in solo stocks, some in mutual funds that pool money into a mix of assets, and some hoard precious metals like gold and silver.

Mutual funds are particularly popular as retirement options, as 401(k)s and IRAs are tax-advantaged. In other words, the financial infrastructure is already there to integrate Bitcoin seamlessly.

Bitcoin individual Retirement Accounts (IRAs) are already there to serve retirees, from BitIRA and iTrustCapital to Bitcoin IRA and Alto IRA. 

At the moment, paper Bitcoin is still dominant with mutual funds. Case in point, Bitcoin ProFund (BTCFX) brings exposure to Bitcoin but only through futures contracts. Since inception in July 2021, this actively managed fund gave holders annualized performance of 22.10%

For comparison, the average mutual fund return on 401(k) is within 3%- 8% range. This becomes even less impressive when one accounts for inflation, or how the inflation metric can be adjusted via the relative importance of items to deliver politically palatable results. 

This carries over to jobs numbers and paychecks as well. When adjusted for inflation, it often turns out that real income has flatlined as the best case scenario.