The rise of central bank digital currencies (CBDCs) introduces regulatory and structural shifts to crypto markets. While CBDCs enhance financial inclusion and government oversight, they pose competition to Bitcoin (BTC) by offering state-backed digital alternatives. Unlike BTC’s decentralized scarcity, CBDCs are centralized and programmable, potentially limiting anonymity. However, BTC’s status as a borderless, inflation-resistant asset may attract users wary of government control. Historical distrust of fiat systems could sustain BTC’s appeal, even as CBDCs dominate retail payments. The coexistence of both may create a dual ecosystem: CBDCs for daily transactions and BTC for decentralized wealth preservation.