As Bitcoin follows in gold's footsteps volatility should decline: Deutsche Bank

Deutsche Bank research analysts likened the historical arc of gold adoption to what is happening for the world's largest digital currency, Bitcoin.

"History appears to be repeating itself. Like Bitcoin, gold was once subject to skepticism, suspicion, and demand speculation," Deutsche Bank's analysts said in a research note from Monday. 

But as Bitcoin matures, and regulatory uncertainty in key markets like the U.S. and UK crumbles amid a surge in adoption among traditional investors and financial institutions, the cryptocurrency's volatility is likely on the decline, the analysts said. In making their argument, they cited Bitcoin's 30-day volatility dropping to historic lows in August even as the price hit an all-time high.

"This combination suggests we may be witnessing the start of a gradual decoupling between Bitcoin's spot prices and volatility as the crypto's integration into portfolios is maturing," the Deutsche analysts wrote.

Bitcoin was down about 2% to $112,897.69 as of 12:46 p.m. ET, according to The Block Price Page.

Central banks could hold both Bitcoin and gold 

The bank's researchers also said both gold and Bitcoin should be able to coexist on central bank balance sheets by 2030. Emerging markets, with inflationary pressures, might benefit more from using Bitcoin as a reserve asset, they added.

Deutsche Bank has previously said it could see Bitcoin becoming "the 21st century gold."

Separately, Deutsche Bank is exploring stablecoins and tokenized deposits, including potentially issuing its own token, as more banks increasingly expand their presence in digital assets.