European Central Bank President Christine Lagarde has decreed that Bitcoin will never find its way into the vaults of an EU central bank.

In a recent statement, Lagarde pointed out that Bitcoin does not possess the defining characteristics of any reserve asset-liquidity, security, or stability.

She made the comment in response to a growing debate over Bitcoin’s potential role in national reserves after a proposal was made by a Czech central banker.

Bitcoin Fails To Meet Reserve Asset Standards: ECB

Lagarde’s rejection of Bitcoin as a reserve asset continues in light of the traditional skepticism of cryptocurrencies by the ECB. She remarked that Bitcoin remains volatile and without a central controller, making it unsuitable to be used by central banks in their reserves.

Unlike gold and government bonds whose value is safeguarded by such a central institute, Bitcoin stands out as uncertain and unreliable as an asset class during economic fluctuations, she said.

European Central Bank President Christine Lagarde says Bitcoin will not be included in any EU central bank reserves. pic.twitter.com/OH01YiG5e5

— Altcoin Daily (@AltcoinDailyio) January 30, 2025

The comments from the ECB president came in response to Czech National Bank Governor Aleš Michl, who suggested including Bitcoin in the national reserves of the Czech Republic.

Although the Czech Republic is not a eurozone country, its central bank is still represented on the General Council of the ECB, meaning that its policy debates are part of the general European financial framework.

Lagarde, however, quickly shot down the suggestion, further entrenching the cautious position of the ECB on digital assets.

The message from the ECB president echoes the viewpoint that Bitcoin could not be maintained in their vaults. Other banks of Europe do share the views of ECB of Poland; Romania also said that these cryptocurrencies will probably be kept off their official balances.

Stance Vs. Crypto

Even beyond Europe, major institutions such as the US Federal Reserve have taken a firm stance against holding Bitcoin. Fed Chair Jerome Powell had earlier said the US central bank is legally prevented from placing Bitcoin in its reserve, making the chasm between the old financial system and the currency even clearer.

Many lawmakers are hesitant about Bitcoin because they are worried about unclear regulations, its tendency to have price spikes, and its limited use for everyday transactions.

Some countries are becoming more open to Bitcoin, but most large economies still think it’s too risky to keep in their government reserves.

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Bitcoin’s Place In The Global Financial System

Despite its rejection by central banks, Bitcoin is a major force in global finance. It has gained traction as a store of value among institutional and retail investors alike, with some even referring to it as “digital gold.”

Featured image from Sky News, chart from TradingView

The crypto and US equities markets started the week on the worst possible note, reacting negatively to the launch of the Chinese AI platform DeepSeek. Despite the initial downturn, the Bitcoin price has since returned above the $100,000 level, moving mostly sideways to close the week.

According to a recent on-chain report, liquidity on centralized exchanges has reached a new record high, suggesting that crypto bulls now have increased buying power. The question is — can this fresh buying power push the Bitcoin price to a new high?

Impact Of Growing Stablecoins On Crypto Prices

In its latest weekly report, blockchain intelligence firm CryptoQuant revealed liquidity in the crypto market has experienced a significant boost since the US Presidential election in November 2024. Liquidity in crypto is measured by the total value of circulating stablecoins, which recently reached a new all-time high.

According to data from CryptoQuant, the market capitalization of dollar-backed stablecoins surpassed the $200 billion mark last week and is currently at $204 billion, a record high. This value represents an over 22% expansion since Donald Trump’s victory in the US elections.

One major contributor to this growth is Tether’s USDT, which accounts for nearly 70% of the USD-denominated stablecoin market. USDT’s market cap currently stands at around $139 million, reflecting a 15% increase since November last year.

Source: CryptoQuant

Interestingly, this expansion has been mirrored in the stablecoin balances of centralized exchanges, with the total amount of USDT on these trading platforms now at record levels. CryptoQuant revealed that the market cap of USDT on centralized crypto exchanges has increased from $30.5 billion to $43 billion in the past three months, representing a 41% increase.

Dollar-backed stablecoins are an important source of liquidity for trading on centralized exchanges. Hence, an expansion in the stablecoin supply of exchanges implies an increase in the buying power of crypto investors.

“The next leg up for Bitcoin and crypto prices could be around the corner, as the stablecoin liquidity impulse starts to expand again,” CryptoQuant noted. Moreover, a growing stablecoin market cap — especially on centralized exchanges — is historically correlated with higher Bitcoin prices.

CryptoQuant added:

USDT’s liquidity impulse (30-day % change in market capitalization) is now slightly positive after contracting by 2% at the start of 2025. A further acceleration typically drives crypto prices higher. Meanwhile, USDC’s liquidity impulse is expanding by 20%, its fastest pace in at least a year.

Bitcoin Price At A Glance

As of this writing, Bitcoin is valued at around $102,400, reflecting an almost 2% decline in the past 24 hours.

The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView

Featured image from iStock, chart from TradingView

The price of Bitcoin (BTC) suffered a significant loss on Friday as prices dipped below $102,000 marking the end of a rather turbulent trading week. As the global financial markets weathered major losses, Bitcoin made no new price discovery, casting more speculations over the bull market.

Critical Price Level Emerges At $98,000 For Bitcoin

Despite an overall positive performance in January, Bitcoin has struggled to confirm the bull run continuation with its all-time high price increasing by merely 0.6%.

As market investors remain confident of more price gains, blockchain analytics firm Glassnode has highlighted a price level that might prove pivotal to Bitcoin’s current bullish setup. In a new post on X, Glassnode shares that market participants have traded a substantial volume of BTC between the price range of $94,000 – $101,000 over the last 45 days.

As a result of this development, there is currently a dense supply cluster forming around the $98,000 price zone indicating a significant amount of investors are acquiring BTC near this price zone. Historically, price areas of high accumulation activity are considered important as they tend to serve as strong support in market downturns and act as resistance during price rallies.

Therefore, if Bitcoin consolidates above $98,000 for an extended period, this price zone could form a sturdy floor, offering support for further rallies in the current bullish structure. However, a fall below this price level could convert it into a strong resistance zone as investors may aim to sell to recoup losses. 

In terms of immediate price movement, if Bitcoin bulls can hold above $98,000 with sufficient buying pressure, the asset could make a return to the $106,000 price region which currently represents a strong psychological resistance zone. On the other hand, if sellers overpower demand at the $98,000 price level, Bitcoin is subject to further decline with a possible retest at $92,000 on the table.

BTC Records Nearly $450 Million In Exchange Outflows

In other developments, the Bitcoin market registered $442 million in exchange outflows over the past week. According to more data from IntoTheBlock, a net outflow of $70 million was reached as exchange inflows stood at $372 million.

Generally, higher exchange outflows than inflows is a bullish development indicating investors are less interested in selling and are moving their assets to private wallets in expectation of a price gain. At press time, BTC trades at $102,269 after a 1.94% decline in the past day. Meanwhile, the asset’s daily trading volume is down by 12.58% and valued at $44.44 billion.

Featured image from Depositphotos, chart from Tradingview