De Dollarization, Banking Crises, Russia & China to Bypass US dollar
Bitcoin Purchasing Power surpasses USD, Ethereum Shanghai Update
@HooiTerrence
By Terrence Hooi
Chief Investment Strategist
The below is the opinion of the authors. Any conclusions are their own. This should not be considered as investment advice. Investing involves the risk of loss and returns are not guaranteed.
1.) JP Morgan CEO Banking Crises Not Over
In 2022, the world faced numerous challenges including a devastating war in Ukraine, rising geopolitical tensions with China, political divisions in America, global economic uncertainty, high energy and food prices, inflation, and the ongoing impact of COVID-19.
This year, Jamie Dimon, CEO of JP Morgan, expressed his belief that the banking crisis will have long-lasting effects in his annual letter. He stated that the current crisis is not yet resolved and has uncovered some flaws in the system. Despite this, he clarified that the situation is not as severe as the 2008 crisis.
2.) Ethereum’s Shanghai Upgrade
The Shanghai Upgrade of Ethereum is an eagerly anticipated event in the crypto world. The upgrade is scheduled to occur on April 12th and is expected to have a significant impact on the network.
Overall, the Shanghai Upgrade of Ethereum has the potential to be a game changer for the network and could lead to a significant increase in adoption and activity on the platform. The reduction in transaction fees and increase in liquidity could open up new possibilities for developers and investors alike.
The upgrade could lead to a reduction in transaction fees.
Max Williams, a crypto investor, believes that the upgrade could provide a catalyst for more activity.
With more liquidity from unstaked ETH, liquid staking derivatives could be the biggest beneficiary.
3.) De Dollarization
The US dollar is losing its reserve currency status. Here's why.
The US dollar has been the foundation of the world's economy for many years. It is so influential that some countries have even adopted it as their official currency, including El Salvador, Panama, and Ecuador.
Historically, the US dollar has been considered a safe haven for investors globally. During times of economic crisis, investors typically move their money into the US dollar as a refuge from instability in other economies. However, in 2014, there was a significant shift in this trend.
At present, there is a shift in the global trade scenario, with a move away from the dominance of the US dollar. A notable trend in this regard is the increasing volume of trade between China and Russia, which is now denominated in Yuan. This shift in trade activity can be observed from the beginning of 2022.
This chart, provided by the Federal Reserve, illustrates the changes in foreign exchange reserves since 2000, demonstrating a consistent decline in the US Dollar's share of foreign reserves over time.
The fact that trade is moving away from the US Dollar towards other currencies like the Yuan does not necessarily indicate that the US Dollar is on the verge of collapsing. Despite the increased competition, the US Dollar is still widely considered to be one of the most stable currencies in the world. There continues to be a high demand for US Dollars, though there are now other currencies being used more frequently in international trade.
Bonus:
Bitcoin Purchasing Power Surpasses USD’s
In recent years, the purchasing power of the US dollar has decreased, while Bitcoin's correlation with the dollar has significantly declined, according to a tweet by Kaiko. Bitcoin's correlation with the dollar has dropped from -60% to -23% year-to-date, suggesting that Bitcoin's value as a store of value may be increasing relative to the US dollar.