Decline of US Dollar and rise of Bitcoin
As a result of a spiralling $34 trillion U.S. debt pile, countries worldwide are gradually shifting away from the US dollar. This shift is fuelled by fears of an impending collapse and the steady rise of bitcoin and other cryptocurrencies. Janet Yellen, US Treasury Secretary, (pictured above), has expressed her concerns about this trend. Despite a critical warning from the Federal Reserve, the price of bitcoin has soared over the past year, bolstered by the growing confidence that former U.S. President Donald Trump may reclaim the presidency in November.
The radical Project 2025 policy plan has set bitcoin on a collision course with gold. Yellen fears that US financial sanctions will diminish the dollar’s role globally as Russia promotes the use of bitcoin and other cryptocurrencies. “The more we have used sanctions, the more countries look for ways to engage in financial transactions that don’t involve the dollar,” Yellen explained to U.S. lawmakers on the House financial services committee.
Crypto conversion and its global Impact
BlackRock’s CEO, Larry Fink, who led the successful campaign to bring bitcoin spot exchange-traded funds (ETFs) to Wall Street, has issued a warning about the rapid growth of the U.S. debt pile. He expressed concern about the burden this massive spending, which we can’t afford, is placing on future generations. Fink called for global economic growth and strategies to minimize the impact of the deficit on the economy.
Bank of America analysts have warned that the U.S. debt load is set to increase by $1 trillion every 100 days, which could fuel a surge in bitcoin prices. Meanwhile, BlackRock analysts have cautioned about an unprecedented scenario that could impact the bitcoin price and crypto market as the Federal Reserve and central banks are forced to keep interest rates higher than pre-pandemic levels to tackle persistent inflationary pressures.
Fink, who once labelled bitcoin as “an index of money laundering,” has now acknowledged it as a legitimate financial instrument. He believes it is an investment tool for those who fear countries are debasing their currency through excessive deficits. BlackRock’s acceptance of bitcoin is widely credited with powering the bitcoin price and crypto market rebound over the past year.
The U.S. has imposed strict financial sanctions on Russia and Iran in recent years, leading to accusations of weaponizing the dollar and pushing the so-called Brics group of emerging countries away from the western financial system. In response, Russia’s central bank has encouraged the use of bitcoin and crypto to counter Western sanctions.
As the U.S. election in November approaches, some bitcoin and crypto traders are betting that the bitcoin price will reach an all-time high. Geoffrey Kendrick, Standard Chartered’s head of forex and crypto research, predicts a fresh all-time high for bitcoin in August, followed by $100,000 by U.S. election day. He expects the bitcoin price to reach $150,000 by the end of 2024 and hit $200,000 before the end of 2025, giving bitcoin a market capitalization of around $4 trillion.
Trump, who has emerged as the preferred candidate for the bitcoin and crypto community, promises to protect people’s right to hold bitcoin. This stance starkly contrasts with the Biden administration’s anti-crypto stance, further fuelling the crypto revolution.
