Despite the recent slight rebound of the US Dollar Index (DXY), a user on X claiming to be a former Goldman Sachs analyst, "Wolf Financial," has issued a warning that the dollar may lose its status as the global reserve currency. The analyst believes that no single fiat currency can replace the dollar, and global trade may thus split into regional systems, with countries potentially turning to gold, Bitcoin, or Central Bank Digital Currency (CBDC). This view is supported by hedge fund manager Ray Dalio, who believes that the US's continuously expanding debt could lead to "economic heart disease," making limited supply crypto assets an attractive alternative. Given the negative correlation between the US Dollar Index and Bitcoin, if the dollar indeed declines, Bitcoin may benefit from it.
The Dollar's Reserve Status is at Risk: What’s Next?
The US Dollar Index (DXY) recorded a slight rebound, reaching 98.2 at the time of writing. After a recent decline, the index rose by 0.09% compared to the previous trading day.
Despite the rise of the dollar, a user on X, claiming to be a former Goldman Sachs analyst, has issued a stern warning about the future of the dollar. He stated that the world may be heading towards an era where the dollar loses its long-standing status as the global reserve currency.
Wolf Financial explains that a currency can only maintain its reserve status with the support of strong military power. The United States currently fulfills this role. Why? Because it possesses a nuclear arsenal, submarines, stealth aircraft, and hundreds of military bases around the world.
The U.S. Navy also ensures the security of global trade routes, which gives other countries confidence to use the U.S. dollar for international settlements. This arrangement allows the U.S. to maintain its reserve currency status and print money freely.
"But there is only one question... the US dollar is clearly in decline. So which country's currency can replace the dollar? None," the post stated.
Evolution of Bitcoin's Role
Analysts believe that whether it is the Renminbi, Yen, or Russian Ruble, none of the fiat currencies possess the liquidity, trust, or economic support necessary to replace the US Dollar. Therefore, the world may face decades of turmoil instead of a smooth transition to a new single reserve currency.
In this case, global trade may split into regional systems. Therefore, countries may trade more with neighboring nations and empires rather than on a global scale. The United States may heavily rely on Canada and Mexico for trade and may even revert to the gold standard due to having the largest gold reserves.
At the same time, other countries may try different systems. Some countries may adopt gold-backed currencies, others may use Bitcoin (BTC), many countries may turn to Central Bank Digital Money (CBDC), and some countries may experiment with the International Monetary Fund's Special Drawing Rights (SDR).
"What will the situation be like in the long run? The East will trade with the East, and the West will trade with the West. Most fiat currencies will disappear, and countries will either use gold-backed currencies or use Bitcoin on a government-controlled second layer," Wolf Financial stated.
(The proportion of gold and the US dollar in international reserves | Source: The Kobeissi Letter)
"We conclude from this chart: as the percentage of the dollar in global reserves declines, the percentage of gold in global reserves suddenly surges," noted The Kobeissi Letter.
Dalio Acknowledges Crypto Assets
Ray Dalio, the founder of Bridgewater Associates, has confirmed this view. He recently warned that the rising debt brings the United States closer to an "economic heart attack." In this context, crypto assets may become a potential alternative asset.
"Crypto Assets are now a limited supply alternative currency, therefore, all else being equal, if the supply of the dollar increases and/or demand decreases, this could make Crypto Assets an attractive alternative currency," said Dalio.
Therefore, as the US dollar index stabilizes, the financial community is closely watching, weighing the resilience of the dollar against analysts' bold predictions of its decline. In addition, since the US dollar index and Bitcoin have an inverse relationship, if analysts' predictions come true, Bitcoin may benefit.
Conclusion
The dominance of the US dollar may no longer be taken for granted, as the global financial system is facing potential upheaval. Although the dollar index remains stable in the short term, warnings from well-known analysts and financial giants should not be overlooked. They generally believe that the growing US debt and political interference in the Federal Reserve are eroding the trust foundation of the dollar. In this increasingly uncertain macro environment, non-sovereign assets with limited supply, such as gold and Bitcoin, are becoming the preferred choices for investors to hedge risks and preserve value. The long-term trend of the dollar will not only affect traditional financial markets but will also profoundly shape the future landscape of crypto assets.
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End of the US Dollar Dominance? Analysts Warn of a Shift in Reserve Strength, Gold, Bitcoin, and CBDCs May Be in Demand
Despite the recent slight rebound of the US Dollar Index (DXY), a user on X claiming to be a former Goldman Sachs analyst, "Wolf Financial," has issued a warning that the dollar may lose its status as the global reserve currency. The analyst believes that no single fiat currency can replace the dollar, and global trade may thus split into regional systems, with countries potentially turning to gold, Bitcoin, or Central Bank Digital Currency (CBDC). This view is supported by hedge fund manager Ray Dalio, who believes that the US's continuously expanding debt could lead to "economic heart disease," making limited supply crypto assets an attractive alternative. Given the negative correlation between the US Dollar Index and Bitcoin, if the dollar indeed declines, Bitcoin may benefit from it.
The Dollar's Reserve Status is at Risk: What’s Next?
The US Dollar Index (DXY) recorded a slight rebound, reaching 98.2 at the time of writing. After a recent decline, the index rose by 0.09% compared to the previous trading day.
Despite the rise of the dollar, a user on X, claiming to be a former Goldman Sachs analyst, has issued a stern warning about the future of the dollar. He stated that the world may be heading towards an era where the dollar loses its long-standing status as the global reserve currency.
Wolf Financial explains that a currency can only maintain its reserve status with the support of strong military power. The United States currently fulfills this role. Why? Because it possesses a nuclear arsenal, submarines, stealth aircraft, and hundreds of military bases around the world.
The U.S. Navy also ensures the security of global trade routes, which gives other countries confidence to use the U.S. dollar for international settlements. This arrangement allows the U.S. to maintain its reserve currency status and print money freely.
"But there is only one question... the US dollar is clearly in decline. So which country's currency can replace the dollar? None," the post stated.
Evolution of Bitcoin's Role
Analysts believe that whether it is the Renminbi, Yen, or Russian Ruble, none of the fiat currencies possess the liquidity, trust, or economic support necessary to replace the US Dollar. Therefore, the world may face decades of turmoil instead of a smooth transition to a new single reserve currency.
In this case, global trade may split into regional systems. Therefore, countries may trade more with neighboring nations and empires rather than on a global scale. The United States may heavily rely on Canada and Mexico for trade and may even revert to the gold standard due to having the largest gold reserves.
At the same time, other countries may try different systems. Some countries may adopt gold-backed currencies, others may use Bitcoin (BTC), many countries may turn to Central Bank Digital Money (CBDC), and some countries may experiment with the International Monetary Fund's Special Drawing Rights (SDR).
"What will the situation be like in the long run? The East will trade with the East, and the West will trade with the West. Most fiat currencies will disappear, and countries will either use gold-backed currencies or use Bitcoin on a government-controlled second layer," Wolf Financial stated.
(The proportion of gold and the US dollar in international reserves | Source: The Kobeissi Letter)
"We conclude from this chart: as the percentage of the dollar in global reserves declines, the percentage of gold in global reserves suddenly surges," noted The Kobeissi Letter.
Dalio Acknowledges Crypto Assets
Ray Dalio, the founder of Bridgewater Associates, has confirmed this view. He recently warned that the rising debt brings the United States closer to an "economic heart attack." In this context, crypto assets may become a potential alternative asset.
"Crypto Assets are now a limited supply alternative currency, therefore, all else being equal, if the supply of the dollar increases and/or demand decreases, this could make Crypto Assets an attractive alternative currency," said Dalio.
Therefore, as the US dollar index stabilizes, the financial community is closely watching, weighing the resilience of the dollar against analysts' bold predictions of its decline. In addition, since the US dollar index and Bitcoin have an inverse relationship, if analysts' predictions come true, Bitcoin may benefit.
Conclusion
The dominance of the US dollar may no longer be taken for granted, as the global financial system is facing potential upheaval. Although the dollar index remains stable in the short term, warnings from well-known analysts and financial giants should not be overlooked. They generally believe that the growing US debt and political interference in the Federal Reserve are eroding the trust foundation of the dollar. In this increasingly uncertain macro environment, non-sovereign assets with limited supply, such as gold and Bitcoin, are becoming the preferred choices for investors to hedge risks and preserve value. The long-term trend of the dollar will not only affect traditional financial markets but will also profoundly shape the future landscape of crypto assets.