• Home
  • Cryptocurrency
    • Bitcoin
    • Ethereum
    • XRP
    • Litecoin
    • Altcoin
    • Cardano
    • Tether
    • DOGE
    • Solano
    • XLM
    • DOT
    • XDC
    • SHIBA
    • BNB
    • Ape
    • HBAR
    • QNT
  • Blockchain
  • Regulation
  • Market
  • Live
    • Prices
    • ICO
  • Meta
    • NFT
  • Technical Analysis
    • XRP
    • BTC
    • XLM
    • ADA
    • TETHER
    • ETC
    • ETH
    • DOGE
    • LTC
  • Exchange
  • Mining
Monday, May 12, 2025
  • Login
  • Register
Coin24h.com
  • Home
  • Cryptocurrency
    • Bitcoin
    • Ethereum
    • XRP
    • Litecoin
    • Altcoin
    • Cardano
    • Tether
    • DOGE
    • Solano
    • XLM
    • DOT
    • XDC
    • SHIBA
    • BNB
    • Ape
    • HBAR
    • QNT
  • Blockchain
  • Regulation
  • Market
  • Live
    • Prices
    • ICO
  • Meta
    • NFT
  • Technical Analysis
    • XRP
    • BTC
    • XLM
    • ADA
    • TETHER
    • ETC
    • ETH
    • DOGE
    • LTC
  • Exchange
  • Mining
No Result
View All Result
  • Home
  • Cryptocurrency
    • Bitcoin
    • Ethereum
    • XRP
    • Litecoin
    • Altcoin
    • Cardano
    • Tether
    • DOGE
    • Solano
    • XLM
    • DOT
    • XDC
    • SHIBA
    • BNB
    • Ape
    • HBAR
    • QNT
  • Blockchain
  • Regulation
  • Market
  • Live
    • Prices
    • ICO
  • Meta
    • NFT
  • Technical Analysis
    • XRP
    • BTC
    • XLM
    • ADA
    • TETHER
    • ETC
    • ETH
    • DOGE
    • LTC
  • Exchange
  • Mining
No Result
View All Result
Coin24h.com
No Result
View All Result
Ledger Nano X - The secure hardware wallet
ADVERTISEMENT

Bitcoin Unlikely to Replace US Dollar as Global Reserve: Marc Chandler

6 October 2020
in Market
Reading Time: 11 mins read
A A
0
189
SHARES
1.5k
VIEWS
Share on FacebookShare on Twitter
cryptotrader
ADVERTISEMENT

Related articles

Juiced USDS Yields Woo Solana Traders to Sky’s Stablecoin

Juiced USDS Yields Woo Solana Traders to Sky’s Stablecoin

23 November 2024
Pro-crypto Legislation Could Usher in Renaissance for DeFi as TVL Rises 31%

Pro-crypto Legislation Could Usher in Renaissance for DeFi as TVL Rises 31%

23 November 2024


Bitcoin is unlikely to replace the greenback as a global reserve currency any time soon, according to one of the most highly regarded analysts in foreign exchange.

“Backing the dollar is the world’s biggest, deepest and the most transparent government bond market,” Marc Chandler, chief market strategist at Bannockburn Global Forex and author of the book “Making Sense of the Dollar,” told CoinDesk in a video chat on Wednesday. “I just don’t know how bitcoin can replace the greenback from that viewpoint.”

A global reserve currency is the one that facilitates cross-border trade, including investments and international debt obligations. Global central banks hold reserve currencies to help protect against major swings in foreign-exchange rates, as well as in the conduct of monetary policy.

The U.S. dollar has been the primary reserve currency since 1944, and investors tend to park funds in dollar-denominated assets or hold dollars during times of stress in the global economy. For instance, the U.S. Dollar Index, which tracks the greenback’s value against a basket of other major fiat currencies, rose from 94.65 to 103.00 in mid-March as global equity markets tanked on coronavirus-induced recession fears. 

Some analysts, however, foresee markets losing confidence in the dollar over the next few years. That’s because the Federal Reserve has pumped trillions of dollars of liquidity into the financial system over the past decade and is likely to continue printing money at an elevated pace for some time. 

Fed’s balance sheet size
Source: St. Louis Federal Reserve

The central bank’s balance sheet has expanded from $905 million to over $7 trillion in the past nine years, according to the St. Louis Fed. It has grown by more than $4 trillion in the past five months, as the Fed rolled out emergency liquidity programs to counter the economic toll of the coronavirus, while ramping up monthly asset purchases in a process known as quantitative easing.

“The U.S. dollar is on the brink of losing its position of world’s global reserve as inflation concerns in the U.S. grows,” Goldman Sachs said in July. While the investment bank speculates that gold could replace the dollar, the crypto community contends that bitcoin, with its deflationary monetary policy, is the best alternative to the dollar. 

Bitcoin’s pace of supply expansion is reduced by 50% every four years via a process called mining reward halving. At inception, each bitcoin block reward was worth 50 BTC. As of now, per block reward is 6.25 BTC – down from 12.5 BTC prior to May 12. Bitcoin’s tapering supply growth while the Fed has increased dollars is a large reason why many in the crypto markets have long been predicting the dollar’s collapse and bitcoin’s rise as a global reserve.

However, such predictions often neglect that countries do not just accumulate dollars but also buy U.S. government bonds. “Central banks don’t just hold dollars; they hold U.S. Treasuries. That’s what corporations and large institutions do,” Chandler said.

Why countries buy U.S. Treasury Bonds

As of June 2020, Japan held U.S. Treasury securities worth $1.26 trillion, and China held $1.07 trillion, according to data provider Statista. According to the Federal Reserve and U.S. Department of the Treasury, foreign countries held $7.04 trillion worth of U.S. Treasury securities as of June 2020.

statistic_id246420_major-foreign-holders-of-us-treasury-securities-2020

Major holders of US treasuries
Source: Statista, Federal Reserve

The Chinese and Japanese purchases of Treasury bonds isn’t a case of these nations’ generosity, as is popularly perceived, but economic math. These nations run substantial current account surpluses (and capital account deficits) and invest their surplus forex reserves in the U.S. government bonds, given it is the deepest in the world. Also, investing in the U.S. Treasury helps Japan and China keep their currencies from appreciating and preserves current account surpluses. 

As of Aug. 20, the size of the global sovereigns, supranational and agencies bond market was $87.5 trillion, of which the U.S. accounted for $22.4 trillion and China $19.8 trillion. While China is a close second, its currency, the yuan, has yet to achieve full capital account convertibility and there are transparency concerns regarding Chinese markets. 

Put simply, no other bond market has the depth and transparency to absorb billions of dollars of demand other than the U.S. bond market. “No bond market can come close to Treasurys,” Chandler said.

Meanwhile, no central bank has purchased bitcoin to date. While the institutional participation has increased this year, the cryptocurrency continues to behave like an investment asset rather than a safe haven or a future global reserve. Bitcoin fell during the March crash and has risen strongly over the past six months alongside the U.S dollar’s sell-off. 

Besides, price volatility is an issue. Bitcoin has moved at an average pace of 16% per month this year, substantially higher than a non-major currency like the Mexican peso, as noted by Chandler. 

As such, the idea of bitcoin supplanting the U.S. dollar as the global reserve in the near term looks far-fetched. 

Dollar has withered a bigger sell-off in the past

The U.S. Dollar Index (DXY) fell by 10% to a 16-month low of 101.75 in the mid-March to mid-August period. The slide, coupled with the Federal Reserve’s recent decision to adopt a more flexible approach to controlling inflation, has bolstered fears of the dollar’s collapse as a reserved currency. 

download-20-2

Dollar Index
Source: TradingView

However, the dollar has suffered bigger sell-offs in the past and still maintained its reserve status. For instance, the index, which rose sharply from 77 to 89 in the seven months following the collapse of Lehman Brothers in August 2008, reversed gains and fell back to 72.70 by May 2011. That’s a nearly 20% decline in 12 months or so.

More important, when the DXY made a low near 72.70 in May 2011, EUR/USD was trading near $1.45, up 23% from the current rate of $1.1750. Meanwhile, GBP/USD was trading above $1.65 – 28% more than the current exchange rate of $1.29. The Japanese yen, Australian dollar, Canadian dollar and other major currencies were also trading at significantly higher levels than seen today, as noted by Chandler. 

Essentially, the U.S. dollar was aggressively sold on the Federal Reserve’s quantitative easing programs. Even so, it remained the dominant global reserve currency. 

The dollar accounted for more than 60% of the global forex reserves in crisis and recovery years of 2009, 2010 and 2011, according to data source statista.com. The situation hasn’t changed much this year despite the coronavirus crisis. The greenback accounted for 61% of the global currency reserves in the second quarter, as per the International Monetary Fund.  

imf-6

World – allocated forex reserves by currency
Source: IMF

Thus replacing the dollar is easier said than done. Bitcoin has to cover plenty of distance before it can threaten the dollar’s hegemony. For that to happen, the crypto community’s focus needs to shift from playing for price rallies to building infrastructure that would accelerate adoption at the institutional level. 

Major central banks like the Fed and the People’s Bank of China are working on digital currencies. Chandler postulates that central bank digital currencies would pave the way for an alternative payment system. 

Dollar sell-off likely to continue

The dollar bounced in September, ending a six-month losing trend even though the Fed adopted a more flexible approach to controlling inflation at the end of August. 

According to Chandler, the dollar’s bounce has got more to do with technical factors. The currency looked oversold against majors and bullish positioning in EUR/USD had reached extremes in August. As a result, a minor bounce was overdue and was amplified by expectations for more monetary easing by the European Central Bank. 

The Fed has created more room for itself to keep interest rates low for a longer period of time by signaling a willingness to tolerate above-target (2%) inflation for some time. As such, the path of least resistance for the dollar is to the downside, unless other central banks follow the Fed’s path. 

With the dollar looking weaker, recent uptrends in bitcoin, gold and assets denominated in the greenback could soon resume. However, if Chandler is correct, the dollar is likely to prevail as the global reserve.



Source link

Cryptohopper
ADVERTISEMENT
[crypto-donation-box]
Tags: BitcoinChandlerDollarGlobalMarcReplaceReserve
Share76Tweet47
Ledger Nano X - The secure hardware wallet
Previous Post

Guggenheim, MoMA-Collected Artist to Release Digital Artwork on the Blockchain

Next Post

FCA Bans Sale of Cryptoderivatives to Retail Consumers in UK

Related Posts

Juiced USDS Yields Woo Solana Traders to Sky’s Stablecoin

Juiced USDS Yields Woo Solana Traders to Sky’s Stablecoin

23 November 2024
0

The heady growth is about as preordained as anything could be in DeFi. Sky is spending $2 million a month...

Pro-crypto Legislation Could Usher in Renaissance for DeFi as TVL Rises 31%

Pro-crypto Legislation Could Usher in Renaissance for DeFi as TVL Rises 31%

23 November 2024
0

Historically, institutions have hesitated to move on-chain due to regulatory risks. However, with bitcoin ETF AUM inflows on track to...

Digital Currency Group’s Barry Silbert Bets Big on AI Blockchain Bittensor

Digital Currency Group’s Barry Silbert Bets Big on AI Blockchain Bittensor

23 November 2024
0

“If you ask five people: 'What is Bittensor?' You will get five different answers,” Silbert, a cryptocurrency OG investor and...

The Subtle Way AI Data Centers Boost Bitcoin Mining Economics

The Subtle Way AI Data Centers Boost Bitcoin Mining Economics

23 November 2024
0

“I don't think the competition for power from AI facilities will significantly impact hashprice,” Mellerud said. “The Bitcoin mining network...

Crypto Agents and Verifiable Systems Are the Future of Safe, User-Centric Tech

Crypto Agents and Verifiable Systems Are the Future of Safe, User-Centric Tech

23 November 2024
0

Applications for this technology span finance, data sharing, education, and beyond. For instance, platforms like Genius Terminal use agents for...

Load More
Next Post

FCA Bans Sale of Cryptoderivatives to Retail Consumers in UK

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Plugin Install : Widget Tab Post needs JNews - View Counter to be installed
  • Trending
  • Comments
  • Latest
Here’s the Road to  for Dogecoin Price Rally-Will it Mark a New ATH in May 2025?

Here’s the Road to $1 for Dogecoin Price Rally-Will it Mark a New ATH in May 2025?

12 May 2025
DeFi Development Soars 20% as Solana Holdings Top 0M With Latest Purchase – CoinDesk

DeFi Development Soars 20% as Solana Holdings Top $100M With Latest Purchase – CoinDesk

12 May 2025
$BNB Price Analysis for May 12, 2025 – CoinDesk

$BNB Price Analysis for May 12, 2025 – CoinDesk

12 May 2025
Bitcoin, Ethereum, & XRP Price Prediction for Next Week

Bitcoin, Ethereum, & XRP Price Prediction for Next Week

12 May 2025

About Us

We publish a comprehensive news feed covering all news relevant to the crypto user, covering main industry news, politics and regulation as well as consumer-level “news you can use” (practical stuff), including handy DIY tips, links to useful tools, unbiased reviews and opinions revolving around cryptocurrency. Simple logic and real-world examples are preferred before technical jargon and personal rants.

Categories

  • Altcoin
  • ApeCoin
  • Bitcoin
  • Blockchain
  • BNB
  • Cardano
  • Cryptocurrency
  • DOGE
  • DOT
  • Ethereum
  • HBAR
  • Litecoin
  • Market
  • Meta News
  • Mining
  • NFT
  • QNT
  • Regulation
  • SHIBA
  • Solano
  • Tether
  • Uncategorized
  • XDC
  • XLM
  • XRP

What’s New Here!

  • Here’s the Road to $1 for Dogecoin Price Rally-Will it Mark a New ATH in May 2025?
  • DeFi Development Soars 20% as Solana Holdings Top $100M With Latest Purchase – CoinDesk
  • $BNB Price Analysis for May 12, 2025 – CoinDesk
  • Bitcoin, Ethereum, & XRP Price Prediction for Next Week
  • Upexi Buys Discounted Locked SOL, Surpasses $100 Million of SOL and Becomes the Largest Publicly-Traded Solana Treasury Company – Stock Titan

Subscribe Now

Our Partner

Round Main Logo
  • About Us
  • Privacy Policy
  • Contact Us

© 2022-2025 coin24h.com

No Result
View All Result
  • Home
  • Cryptocurrency
    • Bitcoin
    • Ethereum
    • XRP
    • Litecoin
    • Altcoin
    • Cardano
    • Tether
    • DOGE
    • Solano
    • XLM
    • DOT
    • XDC
    • SHIBA
    • BNB
    • Ape
    • HBAR
    • QNT
  • Blockchain
  • Regulation
  • Market
  • Live
    • Prices
    • ICO
  • Meta
    • NFT
  • Technical Analysis
    • XRP
    • BTC
    • XLM
    • ADA
    • TETHER
    • ETC
    • ETH
    • DOGE
    • LTC
  • Exchange
  • Mining

© 2020 coin24h.com

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
  • bitcoinBitcoin (BTC) $ 103,921.00
  • ethereumEthereum (ETH) $ 2,550.34
  • xrpXRP (XRP) $ 2.59
  • tetherTether (USDT) $ 1.00
  • bnbBNB (BNB) $ 675.02
  • solanaSolana (SOL) $ 179.40
  • usd-coinUSDC (USDC) $ 0.999961
  • dogecoinDogecoin (DOGE) $ 0.238236
  • cardanoCardano (ADA) $ 0.837577
  • tronTRON (TRX) $ 0.279030
  • staked-etherLido Staked Ether (STETH) $ 2,545.19
  • suiSui (SUI) $ 4.07
  • wrapped-bitcoinWrapped Bitcoin (WBTC) $ 103,776.00
  • chainlinkChainlink (LINK) $ 17.34
  • avalanche-2Avalanche (AVAX) $ 25.52
  • wrapped-stethWrapped stETH (WSTETH) $ 3,069.69
  • stellarStellar (XLM) $ 0.324400
  • shiba-inuShiba Inu (SHIB) $ 0.000017
  • hedera-hashgraphHedera (HBAR) $ 0.223606
  • pi-networkPi Network (PI) $ 1.28
  • the-open-networkToncoin (TON) $ 3.52
  • hyperliquidHyperliquid (HYPE) $ 25.17
  • bitcoin-cashBitcoin Cash (BCH) $ 414.50
  • polkadotPolkadot (DOT) $ 5.24
  • leo-tokenLEO Token (LEO) $ 8.48
  • litecoinLitecoin (LTC) $ 102.33
  • usdsUSDS (USDS) $ 0.999945
  • wethWETH (WETH) $ 2,550.14
  • moneroMonero (XMR) $ 342.45
  • pepePepe (PEPE) $ 0.000014
  • wrapped-eethWrapped eETH (WEETH) $ 2,727.77
  • bitget-tokenBitget Token (BGB) $ 4.91
  • binance-bridged-usdt-bnb-smart-chainBinance Bridged USDT (BNB Smart Chain) (BSC-USD) $ 1.00
  • ethena-usdeEthena USDe (USDE) $ 1.00
  • coinbase-wrapped-btcCoinbase Wrapped BTC (CBBTC) $ 103,899.00
  • whitebitWhiteBIT Coin (WBT) $ 30.33
  • uniswapUniswap (UNI) $ 7.09
  • bittensorBittensor (TAO) $ 461.73
  • nearNEAR Protocol (NEAR) $ 3.27
  • aptosAptos (APT) $ 6.04
  • daiDai (DAI) $ 1.00
  • aaveAave (AAVE) $ 224.72
  • ondo-financeOndo (ONDO) $ 1.07
  • okbOKB (OKB) $ 55.58
  • kaspaKaspa (KAS) $ 0.124315
  • internet-computerInternet Computer (ICP) $ 6.00
  • ethereum-classicEthereum Classic (ETC) $ 20.22
  • crypto-com-chainCronos (CRO) $ 0.102591
  • blackrock-usd-institutional-digital-liquidity-fundBlackRock USD Institutional Digital Liquidity Fund (BUIDL) $ 1.00
  • vechainVeChain (VET) $ 0.032519