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The year 2024 is an interesting one. Bitcoin reached its peak for the first time before halving. Similarly, Ethereum also recorded rises. XRP, however, continues to play the lame duck. Now, Bitcoin aims for a market value of 4 trillion dollars. On the other hand, Wall Street’s bomb is expected for other altcoins including Ethereum and XRP. Of course, all eyes are now on the Fed for what comes next.
IMF Claims Hidden Erosion of US Dollar
There is a perception that the Fed has quietly accepted the view that gold is replacing the dollar. While this perception persists, the IMF made a striking comment about the dollar. According to the comment, there is a decline in the share of the dollar in the foreign exchange reserves of central banks worldwide.
The report prepared by IMF economists such as Serkan Arslanalp, Barry Eichengreen, and Chima Simpson-Bell sheds light on the declining role of the dollar. The sentence is as follows:
“Strikingly, the declining role of the US dollar over the past twenty years has not been matched by an increase in the shares of other major currencies such as the euro, yen, and pound sterling. Rather, the increase in the share of what we call non-traditional reserve currencies, including the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singapore dollar, and Scandinavian currencies, stands out.”
New Digital Financial Technologies
One of the prominent issues in the economists’ assessment is new digital financial technologies. Economists stated that these new digital financial technologies are automatic market-making and automatic liquidity management systems. The emphasis of the economists at this point is as follows:
“Given the strength of the dollar, this recent trend becomes even more striking. This indicates that private investors are moving to dollar-denominated assets.”
While economists express their views in this way, the New York Fed states that this issue is exaggerated and that there is no change in the strength of the US dollar. According to the NY Fed, the actions of a group of small countries are being exaggerated.
Criticisms Emerged
Serious criticisms were made regarding the NY Fed’s assessment. A technology investor and former Coinbase chief technology officer Balaji Srinivasan made the following assessment on X:
“The Fed now acknowledges that some countries have moved to gold. The Fed states that countries representing 3 billion people are a small group. Interestingly, 37.5% of the world is moving away from the dollar and towards gold.”
Billionaire Chamath Palihapitiya, on the other hand, states that Bitcoin can “completely replace gold” as it is adopted by countries. According to him, Bitcoin can reach a market value of 15.7 trillion dollars.
