The share of the US dollar in global reserves fell to 56.32% in Q2 2025, but 92% of this decline was due to exchange rate effects, not changes in central banks' portfolios. Adjusted for currency changes, the decline was marginal to 57.67%, which shows that central banks largely maintained their USD holdings.
The International Monetary Fund's new report on the composition of official foreign exchange reserves (COFER) provides important insights for crypto investors following macroeconomic trends. The data shows that central banks kept the dollar share stable, even amidst significant currency fluctuations during the quarter.
IMF: Central banks remained dollar-heavy despite weakening.
The IMF's COFER dataset maps currency holdings from 149 economies in US dollars. In Q2 2025, large currency movements gave the impression of significant portfolio changes.
According to the report, the DXY index fell by over 10% in the first half of 2025, the largest drop since 1973.
The US dollar fell 7.9% against the euro and 9.6% against the Swiss franc in Q2. These fluctuations reduced the USD share of reserves from 57.79% to 56.32%. However, this was due to exchange rate effects, not an active reallocation.
When adjusting for constant exchange rates, the dollar's reserve share fell only 0.12% to 57.67%. This indicates that central banks made minimal changes to dollar holdings throughout the quarter, challenging narratives of global dedollarization.
Similarly, it seemed that the euro's reserve share increased to 21.13%, a rise of 1.13 percentage points. However, this was also solely due to exchange rate changes.
At constant exchange rates, the euro's share actually declined slightly by 0.04 percentage points, indicating that central banks indeed reduced their euro holdings.
This analysis provides weak macro signals for Bitcoin and other digital assets marketed as a hedge against dollar weakness. Central banks did not diversify away from the dollar, even as the currency fell significantly.
Dedollarization trends are often highlighted as potential drivers for institutional adoption of crypto. However, COFER data, adjusted for exchange rates, suggests that these trends may be misleading without the right context.
The British pound also appeared to increase its reserve share in Q2, but this was likely a value change that masked a real decline in holdings. These findings illustrate why investors should look beyond the headlines to understand the actual changes in liquidity.
The IMF's study provides investors with a more accurate picture of monetary policy during volatile markets. By distinguishing between actual policy measures and temporary value changes, crypto investors can better assess global macro trends.
The central bank's reserve strategies and outlook.
Dollar holdings remained stable in Q2 2025, indicating that central banks still rely on traditional currencies even as digital alternatives gain more attention. The IMF emphasizes that exchange rate adjustments are crucial for correctly understanding changes in reserves.
Central banks prioritize liquidity, returns, and risk when managing reserves. The dollar's strong position is linked to deep markets, high transactional utility, and established systems. These aspects remain hurdles that digital assets must overcome.
The IMF's method shows how exchange rate changes can distort reserve data. In Q2, nearly all reported changes in the major currencies were due to value changes, not actual portfolio reallocation. Central banks maintained a cautious stance amid market turbulence.
These findings contribute to clarifying global trends that shape the cryptocurrency markets. Investors interested in dedollarization as a Bitcoin catalyst should use currency-adjusted figures.
