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Why Cryptocurrency Is Not A Viable Global Reserve Currency to Replace the US Dollar

In recent days ago, the UK Central Bank Boss, Mark Carney, made a revelation, which sparked interest in me to ask how could that phenomenon happen. The Bank of England governor sees digital currency as soon displacing the US dollar as global hedge currency.

I believe this could become a reality as the digital currency has brought a great innovative alternative to consumers dissatisfied with the existing monetary system.

We are also in a period whereby emerging economies either want to get themselves to the list of dominant world currency or begin demanding an alternate currency. Of late, there have been discussions of financial market integration and the possibility of a single global currency that signals the natural death of the reserve currency system.

Therefore, only a single money unit will rule internationally without any exchange rate, a new dimension that will bring the paper money to an end.

The above discussion hints the rise of virtual currency may pose a serious threat to the US dollar. Due to its features, cryptocurrency is an alternative to the existing world currencies, including the US dollar. For example, Bitcoin has a market capitalization of about USD 5.9 billion and continues growing as many and several Bitcoins mined daily.

Cryptocurrencies can, therefore, overcome the challenges of fiat currencies. A digital currency that has a limited supply and which too tied to mathematical programming can be adjusted (i.e., reduced or increased) to maintain the rate of supply. It is conducted without any government intervention or any intermediate agency.

These features make digital currency potential the dethrone the U.S dollar.

Anyway, here are five facts that can help you understand the future of global finance from diverse perspectives, particularly the fiat currencies, cryptocurrencies, and regulation.

The Dwindling of Fiat Currencies

We live in an era of technological advancement when the whole world talks about the “internet of things” in which we are expected to have connectivity between everything and anything. Currency has not been left behind.

Paper currency is considered a thing of the past, as the digital currency is seen to begin taking over and accomplish this feat.

The virtual currency will not only revolutionize the way people make payments but also have the potential to impact the future of world currencies such as the US dollar that is already facing challenges from the Chinese Yuan Renminbi and Euro. The rise of digital currency will add a new dimension to this challenge for the US dollar.

U.S dollar as the world currency has survived for decades, although Japanese Yen became increasingly popular as a global currency during the 1980s. Of late, both Euro and Chinese Renminbi are challenging the U.S dollar in international finance.

Also, it’s evident the share of US dollar in the reserve currency is falling, but the overall the Reserve Currency internationally remains stronger than other currencies. Both the Euro and Chinese Yuan cannot compete strongly with the US dollar because of their valuation problems. EURO is considered as overvalued while the Chinese Yuan being as undervalued.

However, no currency is without a challenge in the international economic environment, including the US dollar. But the US dollar will remain the reserve currency of the world long provided that there is no credible alternative.

Cryptocurrency Regulation

Concerning the regulation on digital currency is concerned, there is no consistency in a manner in which various nations deal with cryptocurrencies. There is no consistency in guidance on the audit, tax, accounting, and legal-related standards. Therefore, regulation has become one of the most debated matters facing the virtual currency industry.

The ability to send money anywhere in the globe within minutes, its completely digital existence and its peer-to-peer decentralized nature of value transfer are the unprecedented and unique features of digital currency.

These make effective regulation of virtual currencies so challenging for policymakers and governments have no clear legislation on virtual currencies that makes the process more complex.

Regulators, central banks, and governments regularly publish opinions on the risk of digital currency to financial stability, customers, and potential regulatory responses.

Many institutions around the world have warned consumers against investing in or using cryptocurrencies, emphasizing on the risks involved. For example, there is no regulation to protect consumers of digital currency, and the value of the virtual currency is unstable and highly volatile.

Potential loses because of fraud and hacking of the digital wallets put consumers at risk. Regulators have still not responded to the issue of criminals using digital currency to funnel money for illicit purposes, e.g., tax evasion. In short, regulatory bodies see cryptocurrency in a negative light.

Cryptocurrency Technology

Of course, the technology behind cryptocurrencies is complex, and therefore, a layperson might not easily understand how digital currency works. It could explain why the public at large or new users is still uncomfortable to use the technology.

However, this technology has been existing and applied in multiple areas. Not all crypto users involve themselves in “Mining” because of a lack of knowledge on resolving the algorithms or lack of high-speed computing machines. But they clearly comprehend the benefits of this technology that is major security, privacy, and low transaction cost.

In fiat currency transactions, the quantity of money moved is normally recorded on a ledger which is entrusted to a third party like the central bank. But in the virtual currency system, the blockchain (master ledger) is distributed across all users.

With this mechanism, there is no need for a third party and remove the need for trust by having users own a copy of the master ledger. The idea behind the technology is that if all users own a copy, nobody can tamper with it.

Despite this appears like a good idea, if a hack occurs on a provider of ledgers, the whole records of transactions can be lost. Nobody will prove to own what and huge quantities of virtual currency can be stolen.

In addition, most people don’t have the patience, technological know-how, and the required internet speeds to regularly maintain such a huge digital ledger. This will create the need for people to hire experts to make things simple. This problem of convenience/efficiency also is seen in the verification process of transactions.

Cryptocurrency Economy

Virtual currency ecosystem has experienced tremendous growth as millions of peoples have taken advantage of enormous business opportunities come with the technology. Universal service providers, mining, payment processing, digital currency exchanges, financial services, and wallet service providers offer virtual currency services to consumers across the globe.

More than 63,000 merchants and 4,500 biggest companies accept digital currencies to increase a global customer base. This phenomenon not only indicates that virtual currency is here to stay, but it’s a potential hub for great business opportunities.

Cryptocurrency as A “Currency”

In economics, the main functions of currency include the following: it is a unit of account, a medium of exchange, and a store of value. Though digital currency meets the criteria as a medium of exchange, it fails as a unit of account and a store of value.

Unlike the U.S dollar and other fiat currencies, virtual currency has shown to be too volatile to make it a reliable resource for which to store value over a long period of time. Since its inception, the digital currency has seen extreme downs and ups. Also, criminal or cyber-attack activities are known to influence the prices of cryptocurrencies.

In December 2017, indications that Wall Street may join the Bitcoin led to a peak price of about USD $20,000. But less than six months later, the price had fallen by two-thirds. This occurs because digital currency doesn’t have any government backing, and its worth is speculative.

Virtual currency’s second main transactional challenge is that it doesn’t genuinely function as a unit of account. Typically for a currency to function as a unit of account, it must be capable of measuring the real economic value of a commodity. For instance, a mango may be stated to be worth USD $1.

The commodity’s value is always seen through the perspective of fiat currency. But that does not case with cryptocurrencies. For instance, whereas some retailers may accept and list price in cryptocurrencies, their prices fluctuate along with the movements of the price of digital currencies.

Therefore, the virtual currency does not represent the real value of a commodity. Instead, it’s an intermediary between the commodity and the fiat currency with which it’s being exchanged.

Take Away

The virtual currency has enormous potential, though it cannot affect the US dollar because of the key regulatory hurdle which it’s facing. Regulators may not allow the use of virtual currency as a global serve currency because of the technological, transactional, and regulatory challenges associated with it.

Low liquidity, extreme price volatility, or a bubble (artificially inflated prices) are market risks that make digital currency not a viable global reserve currency. However, it will remain a hub for financial activities and business opportunities.

The US dollar will remain the most vital currency for financial security and the largest reserve currency for the world. Only the US dollar offers a strong pool of liquidity essential for huge crisis trades.

Also, the US Federal Reserve is the only central banking system trusted to act decisively during crises. Furthermore, the US dollar is secure against challenges from EURO, Chinese Yuan, and cryptocurrency.

IMF Chief Economist Says Crypto Won’t Threaten Dollar Dominance Although Global Reserves Decline

The Chief Economist of the International Monetary Fund (IMF), Gita Gopinath, expressed in an opinion piece in the Financial Times that digital currencies would not displace the US Dollar as the currency that dominates the global trade and finance.

IMF Chief Economist Gita Gopinath.

In 2019, the release of the whitepaper for the Libra currency, a stablecoin backed by a basket of global currencies, met with a lot of regulatory hurdles. Other countries, including China and Cambodia, have been looking and researching for their own national digital currency. Gopinath wrote in the report, “While these are intriguing possibilities, they are improbable in the near-term.”

Gopinath said that the US Dollar’s prominence in trade and banking in the world has an ever-growing increase of usage while comparing other digital currencies to the Euro, which has not been able to overtake the US Dollar, highlighting the number of aspects that led to the success and the widespread dominance of the US Dollar.

Gopinath made it clear that there are two separate topics: payment technologies and the requirements of a global reserve currency. The factors to consider when deciding which currency to use are liquidity, stability, and convertibility. She also added that the technological superiority of the issuing country could become vital because of privacy and security issues around digital currencies.

The economist concluded cheaper and faster cross border payments by utilizing technology is a positive outcome. However, a more balanced system with a more significant role for the Euro and Renminbi is also desirable.

Although the economist has highlighted the US Dollar’s dominance, the IMF’s figures have indicated a decline. Between Q1 of 2016 and Q3 of 2019, the US Dollar’s share of global reserves dropped from 65.46% to 61.78%.

Image via NMP

Facebook Moving Further Away From Libra, But Considering its Own Digital Token System

Libra, the cryptocurrency project by social media giant Facebook has been withstanding regulatory backlash and pressure from the government since its announcement in June 2019.

Facebook is now considering developing a system of digital tokens, pegged to different government-issued currencies including the US dollar and the euro. The new plan will still include Libra, although Libra Association, separately, will continue its work on the stablecoin pegged to a basket of global currencies.

Facebook previously told US senators that the initial group of currencies that Libra will be likely backed by the US dollar, Euro, Yen, British Pound, and the Singapore dollar. Virginia Democratic Senator Mark Warner warned Facebook that China may try to push the Libra Association to include the yuan in the stablecoin, Libra. Senator Warner mentioned that China has been encouraging other governments to include its currency in their reserve holdings, and asked Facebook to commit to excluding it from the list of currencies backing Libra.

When the Libra Association was launched, participating members included Mastercard, Paypal, Visa, Stripe, although these members have currently left the association.

Dante Disparte, Head of Policy and Communications at the Libra Association said, “The Libra Association has not altered its goal of building a regulatory compliant global payment network, and the basic design principles that support that goal have not been changed nor has the potential for this network to foster future innovation.

What’s going on with Calibra?

As Libra Association was created as a non-profit, and Calibra, was created as Facebook’s subsidiary, and would only represent one member.

According to The Information report, Facebook is also planning to delay the launch of Calibra, which was intended to be the digital wallet for the cryptocurrency Libra. Calibra’s technology could enable smartphone users to store and use the cryptocurrency and pay for products with it. The digital wallet will be supporting multiple currencies, including Libra, and its launch will be pushed from this summer to October of this year.

The report also suggested that the availability of the wallet after its launch will be restricted to the jurisdictions of the government-backed currencies.

G7 reports Libra may threaten financial security

The G7 group of nations has drafted a report outlining nine major risks that digital currencies, such as Facebook’s proposed Libra, pose to the global financial system.

As Blockchain.News previously reported, the G7 report stipulated that even if member firms of the governing Libra Association properly addressed regulatory concerns, it may well not be approved by the necessary regulators. From the report, “The G7 believes that no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed.”

The backlash from Mastercard CEO

Mastercard’s CEO, Ajay Banga, stated the reasons behind the company leaving Facebook’s Libra Association in an interview with the Financial Times. Having left the Libra Association in October last year alongside Visa and other firms, the Libra Association has seen eight firms quitting the project.

Banga said, “When you don’t understand how money gets made, it gets made in ways you don’t like.” He added that the social media giant’s data integrity was also another reason behind quitting the project.

The CEO does not understand the stablecoin project’s business model. At the same time, the need for a proprietary digital wallet made it clear that the project may not have positioned itself as a financial inclusion tool, as it was initially stated to be.

Banga also had concerns about the Libra Association’s members to adhere to compliance measures, including anti-money laundering and know-your-customer regulations.

Image via Shutterstock

Cardano CEO Getting a OneCoin Vibe from Federal Reserve's 'Infinite Cash' Statement

In an interview given to CBS’s 60 Minutes on March 22, 2020, Neel Kashkari, the President of Federal Reserve Bank of Minneapolis made a controversial remark after being asked to comment on how the state would deal with it if a situation like the 2008 financial crisis came again due the Coronavirus outbreak.

On being asked whether the Federal Reserve Bank is equipped well enough to provide money to all the banks if they needed to satisfy all incoming panic withdrawals, Mr. Neel Kashkari was quick to respond that this is the reason why Federal Reserve Bank exists.

“Yes. This is the fundamental reason the Federal Reserve exists.”, said Mr. Neel Kashkari. He further added, “If everybody gets scared at the same time and they demand their money back, that’s why the Federal Reserve is here, is to make sure that there’s liquidity, that there’s money to meet those demands.”

Mr. Neel Kashkari further clarified his controversial statement by saying ‘that’s what Congress has told us to do’. He stated that they have been given the authority to print money and provide liquidity in the financial system by first creating it electronically and then printing it with the Treasury Department.

After the interview went live on the internet it received a wave of public criticism, one of the voice was the CEO of Cardano, Charles Hoskinson. He went on to tweet that the comments made by Neel Kashkari gave the US Dollar a real OneCoin Ponzi scam vibe.

OneCoin was a Ponzi token scam that aimed to capitalize of the success and hype of Bitcoin. It is estimated that the scam costed its investors around $4 Billion as they had no idea that the tokens that they were buying had no value.

And it wasn’t just the CEO of Cardano but also other cryptocurrency experts like Anthony Pompliano and Changpeng Zhao who took a dig at Neel Kashkari’s comment.

Anthony Pompliano, co-founder of Morgan Creek Digital tweeted, “History tells us that this is not sustainable long-term for a currency.”

“Ever heard about ‘supply, demand and price’? What happens to price when you have infinite supply?”, tweets CEO of Binance, Changpeng Zhao.

Image via Shutterstock

Bitcoin Should Benefit from the US Dollar Crash, says Top Economist Stephen Roach

Stephen Roach, former Chairman of Morgan Stanley’s Asia division and Yale University senior fellow said that cryptocurrencies including Bitcoin should benefit from the US dollar’s 35% crash.

Economist Roach said that the US dollar could crash by 35 percent against foreign currencies, arising from bullish outlooks of the Chinese yuan and euro. China and the eurozone account for 40 percent of US trade, and the US dollar would not crash unless these two currencies see a significant rise.

“The US economy has been afflicted with some significant macro imbalances for a long time, namely a very low domestic savings rate and a chronic current account deficit,” said Roach. “The dollar is going to fall very, very sharply.”

The Yale University senior fellow said that the problems are going from “bad to worse,” as the US is blowing out the fiscal deficit in the coming years.

Roach highlighted that cryptocurrencies and gold should benefit from dollar weakness. Although the markets are currently too small to absorb major movements in the foreign exchange markets. He said:

“…although cryptocurrencies and gold should benefit from dollar weakness, these markets are too small to absorb major adjustments in world foreign-exchange markets where daily turnover runs around $6.6 trillion.”

Roach believes America is turning away from globalization and is focused on decoupling itself from the rest of the world, and calls it a “lethal combination.” He warns investors that a crash is “virtually inevitable,” and that it could happen over the next few years.

Bitcoin price and COVID-19 stimulus programs

Bitcoin price is currently hitting its lowest levels in around 3 weeks, as stocks are rumored to anticipate an incoming crash.

Bitcoin’s bearish trend has followed a tough week in the stock markets, as Beijing has announced its second consecutive day of record numbers of coronavirus cases, as the risk of a second wave of cases has approached. Worldwide coronavirus cases have reached 8 million at press time.

Federal governments around the world have implemented stimulus programs to combat the crisis, and the prospects of unlimited cash liquidity helped stocks, gold, Bitcoin, and bonds to recover. Bitcoin has surpassed stocks and other traditional assets by rising to around 150 percent in June 2020.

Winklevoss Twins Brief David Portnoy on Bitcoin, BTC Talks Continue

American internet celebrity David Portnoy officially hosted the Winklevoss twins for a long-due conversation regarding Bitcoin (BTC) and cryptocurrencies.

Barstool Celebrity and Winklevoss Talk Bitcoin

Initially calling out the Gemini co-founders in an August 4 Twitter video, Portnoy took to his social media and released a video begging the Winklevoss Bitcoin billionaires to come over to teach him about the cryptocurrency market, repeating numerous times that he didn’t know anything about BTC. He said that he had invested in bitcoins at some point and that he lost the cryptos, jokingly saying that his “20 grand was just sitting somewhere in the Ether.”

The Barstool Sports founder and stocks enthusiast resorted to his usual antics on his Twitter platform and implored the Winklevoss twins to “make it simple.” He said that if they could just show him how to “do it,” invest in Bitcoin in a strategic way, then he will most definitely buy BTC.

Cameron and Tyler Winklevoss both responded to the Davey Day Trader’s video amicably and Portnoy hosted the Bitcoin advocates in a podcast released yesterday.

Winklevoss Billionaire, Always a Bitcoin Fan

Not only does founding the global crypto exchange Gemini count among their exploits, but Winklevoss twins are also known to be the first Bitcoin billionaires. Needless to say, they have both been huge advocates of Bitcoin, which is the largest cryptocurrency on the market, valued north of $11,700 at the time of writing.

The twins have both on numerous counts leveraged their social media presence to educate their followers on the advantages of investing in BTC.

With the US’ economic stimulus strategy in light of the global economic downfall and COVID-19, Tyler Winklevoss had publicly tweeted that the Federal Reserve was continuously “setting the stage for Bitcoin’s next bull run.”

With the Federal Reserve having to print money to deliver economic stimulus relief and the US dollar consequently depreciating in value, Winklevoss is saying that this will in turn drive the price of Bitcoin up on the crypto market.

Bitcoin Emerges from Slump

Winklevoss’ faith in the cryptocurrency has proven to be a self-fulfilling prophecy, as Bitcoin recently emerged from a long slump and has slowly regained its place on the market, creating quite a buzz on Wall Street.

Bitcoin has finally surged past the $11,500 mark for the first time since last September. Cryptocurrency investors worldwide have the utmost faith in BTC, which is the most dominant and valued cryptocurrency on the market. Despite the recent bull run and Bitcoin dropping after having pushed past the $12,000 mark point twice, experts and crypto enthusiasts like the Winklevoss are adamant on Bitcoin still shining and on its future potential on the crypto market.

Wall Street veteran Raoul Pal even publicly stated that according to his predictions, “Bitcoin is likely set to be the best performing major asset in the world over the next 24 months and by a big margin.” Bitcoin enthusiasts are optimistic about the cryptocurrency, despite the global stock market entering “bubble territory” for the first time since 2018, with the ongoing inflation of the US dollar.

DeFi Rules

In parallel to Bitcoin, there has been a recent surge in popularity in the decentralized finance (DeFi) industry, with DeFi altcoins outperforming BTC. Chainlink (LINK) and Band Protocol (BAND) have both witnessed double-digit gains, with LINK altcoins reaching an all-time high on Binance, capping at $14.0551, and reaching fifth place on CoinMarketCap.

Morgan Stanley Chose This Year’s Best Safe Haven Asset—It’s Not Bitcoin

With the coronavirus pandemic being a catalyst to the cryptocurrency industry, Bitcoin has seen short-lived bull runs recently. The pandemic has led to an era of contactless payment, with cryptocurrency touted to be a potential safe-haven asset against inflation caused by stimulus-provoked money printing seen around the world. It seems Morgan Stanley has not hopped on the cryptocurrency bandwagon yet.

However, Morgan Stanley has opposing views, supporting the greenback. The US Dollar fell to a 27-month low this week against the world’s other currencies, where the dollar index reached 92.477, a level not seen since 2018 when investors were more risk-taking. The S&P 500 has also seen a new all-time high after regaining its losses since the emergence of the coronavirus. Backing the world’s reserve currency, Morgan Stanley analysts wrote:

“We expect the US dollar (USD) to be the best safe-haven currency, especially now that lower US rates make it a more attractive funding currency for carry trades.”

The analysts said they keep a “bearish skew” on the dollar, and said that they expect risk sentiment should remain supported for now. Other currency strategists are worried that the current political uncertainties in the US are hurting the dollar. Boris Schlossberg, managing director at BK Asset Management said:

“The longer the stalemate in DC remains in place the greater the danger that the dollar selloff can turn into a rout.”

Japanese yen and Swiss franc dynamics are shifting

The Morgan Stanley analysts said that although the Japanese yen and the Swiss franc remain safe havens, their dynamics are shifting. They were quoted saying that the recent correlation and flows analysis suggests that the trading pair USD/ JPY could even rally in times of investor fears, counter to market perception.

Morgan Stanley concluded that the yen and the Swiss franc remain relatively safe bets, but the investment bank chose the US dollar as the best safe-haven asset in 2020.

US dollar could crash against foreign currencies, Bitcoin could benefit

Not everyone is bullish on the greenback.

Stephen Roach, former Chairman of Morgan Stanley’s Asia division and Yale University senior fellow said that cryptocurrencies including Bitcoin should benefit from the US dollar’s potential 35% crash.

Roach said that the US dollar could crash by 35 percent against foreign currencies, arising from bullish outlooks of the Chinese yuan and euro. China and the eurozone account for 40 percent of US trade, and the US dollar would not crash unless these two currencies see a significant rise.

Roach highlighted that cryptocurrencies and gold should benefit from dollar weakness. Although the markets are currently too small to absorb major movements in the foreign exchange markets.

US dollar’s role as a global reserve currency on edge, arguments for gold

While Bitcoin has been accelerating to become a new kind of digital gold, the yellow metal has recently seen its own rally, reaching past the record $2,000 mark. In addition to the crypto market rally, gold has gained momentum as investors are debating the prospects of another stimulus payout in the US, and increased geopolitical risks.

The record high in gold prices is raising questions regarding the US dollar’s future as the world’s reserve currency.

Goldman Sachs investment bank has said that the US dollar risks losing its position as the world’s global reserve currency, as revealed by the recent surge in gold prices. Goldman Sachs analysts wrote in a note to clients that gold would be the currency of the last resort, especially in the current environment where governments are debasing their fiat currencies.

Goldman Sachs expects $2,300 an ounce for gold’s price within the next 12 months. The investment bank also lifted its silver outlook from $22 to $30.

US Dollar as the World’s Reserve Currency Unlikely to be Diminished, Bitcoin Likely to Suffer

The US dollar is expected to slide even further, but analysts believe its role as the world’s reserve currency is unlikely to be diminished, which may not be the best outlook for Bitcoin (BTC).

BlackRock Investment Institute says that the dollar weakness will continue in the near term, as the many factors including politics and the pandemic will continue to play a part in the greenback’s decline. BlackRock strategists elaborated:

“The prospect of the dollar retaining its perceived safe-haven status is another concern. We are weighing these as a contentious US presidential election looms.”

Amid the emergence of the coronavirus in the United States in March, as investors fled to the greenback for safety as a safe-haven asset. The surge from the investors’ reaction led the US dollar to a three and a half year high during March.

However, with the current weak coronavirus response in the US, strategists say that the US’ economic recovery is in question. Reacting to the United States’ surging deficit and US interest rates remaining low, the greenback fell to a 27-month low at 92.477, compared to its high in 102 in March. Patrik Schowitz from JPMorgan Asset Management said:

“The shrinking of its interest rate advantage makes the USD less appealing and pushes investors to consider deposits in other currencies. These cyclical factors won’t turn around in a hurry and the US dollar likely has room to fall further.”

Could a strong dollar destroy Bitcoin?

Although the US dollar fell to a new low recently, its slight increase of 1.3 percent led to Bitcoin and other major cryptocurrencies, and gold to fall. The inverse correlation between the greenback and Bitcoin could potentially mean that the weakening of the dollar led to Bitcoin’s multiple bull runs.

A senior economist from research firm Capital Economics Jonas Goltermann said that the demise of the dollar is “greatly exaggerated,” and the reasons behind the dollar index’s decline was due to reasons other than the currency’s reserve status.

Goltermann has the view that the coronavirus pandemic has reinforced the dollar’s role as a key currency, as the dollar surged as a safe-haven asset in March when the coronavirus pandemic hit the US and Europe. He highlighted that there is no obvious alternative to the dollar:

“The next two largest economies, the euro-zone and China, are both smaller than the US, and the euro and the renminbi have significant shortcomings as reserve currencies.”

Morgan Stanley has also recently supported the greenback, by naming the US dollar its safe-haven asset of the year.

Morgan Stanley concluded that the yen and the Swiss franc remain relatively safe bets, but the investment bank chose the US dollar as the best safe-haven asset in 2020.

As Bitcoin and gold both benefited from the weakening of the US dollar, the world’s largest cryptocurrency is currently seen struggling to reach the $12,000 level again. Other analysts believe that gold will extend its rally, which may give hope to Bitcoin as the two assets reached an all-time high in monthly average correlation recently.

Ripple Unlocks 1 Billion XRP From Escrow, XRP Trades Heavy As US Dollar Loses Value

Ripple, a leading crypto-payments firm recently unlocked 1 billion in XRP valued at over $280 million from an escrow account—increasing liquidity in the Ripple network.

Ripple, whose XRP token is the fourth most valuable cryptocurrency by market cap has just created more liquidity in Ripplenet by unlocking 1 billion XRP tokens. Meanwhile, Ripple Labs CEO Brad Garlinghouse believes the US dollars continued debasement will see an increase in the XRP price and the overall crypto market.

XRP Liquidity

According to crypto tracker, Whale Alert, Ripple unlocked its escrow account in two transactions unlocking 500 million XRP each time. The slow-release is part of the Ripple labs strategy that began in 2017 when the company decided it would not sell all its XRP tokens at once, but would lock up over 50 billion XRP in a protected account.

Ripple’s strategy involves releasing 1 billion XRP every month to be sold to facilitate funding for its development and payments platform maintenance and to invest in promising startups. The slow-release of tokens allows investors more access to XRP.

Ripple (XRP) operates as both a cross-border payments platform and as a means of transaction. Ripplenet recently came under some scrutiny when it was revealed that one its major banking partners, Santander would not be leveraging XRP as part of its own payments network due to low adoption.

Heavy XRP Trading as USD is Debased

As August came to a close, Ripple’s token XRP was heavily traded as XRPL Monitor reported that 20 million XRP tokens were moved by a whale account, with Coinbase receiving half of the transaction amount.

The strength of the US Dollar has also come under question as the Federal Reserve has continued to hold near-zero interest rates for the time being. Despite the announcement by the Fed that they will soon let interest rates flexibly rise, the continued push for negative interest rates have the potential to continue to spur investment shift towards better yielding assets and cryptocurrencies such as XRP could be a beneficiary of this factor.

Responding to an article in The Wall Street Journal on the Federal Reserves approved a new strategy of pre-emptively lifting interest rates to head off inflation, Ripple Labs CEO Brad Garlinghouse said in a Tweet:

The pandemic is throwing so many playbooks out the window… yesterday’s action flies in the face of decades of precedent. Signs point to further dollar debasement in the near term (leading to further diversification of assets which will certainly be good for crypto).

The XRP token price sits at 0.29 at the time of writing according to data from CoinGecko.

Veteran Analyst Peter Brandt Exited Stocks and Bitcoin Portfolio, Returned To US Dollar

Commodity trading veteran Peter Brandt recently cashed out all his Bitcoin, forex, and stock holdings that constituted his portfolio and moved his assets back into home US currency. The trading legend sold his portfolio in Bitcoin, the foreign exchange market, and stocks and moved the assets into US dollars right before the all-round market and Bitcoin crash two days ago.

Peter Brandt is a legend trending expert known in crypto circles for accurately forecasting the historic collapse of the Bitcoin price in 2018. He is the CEO and founder of the Global trading firm Factor LLC, which trades forex, proprietary capital, fixed income, and equity markets.

Peter is regarded as one of the world’s greatest authorities on the use of classical charting principles to trade futures and forex markets.

Market Crash

What is Peter Brandt’s reasoning? He thinks that the U.S market bubble is in its final stage before it pops. This is what he believes about the US market: “Fight the Fed at your own doom. Getting bearish too early can wipe you out. Market in final blow-off to 12-year bull market. Bubbles can expand further than anyone expects possible, then burst tragically. Great profits in final push.”

After five bearish months, the US dollar index rebounded slightly (+0.5%) this week. Bitcoin and gold responded negatively to that development, with Bitcoin trading at $10,455 at the time of writing the article, a decline of more than 12% on the day, owing to heavy losses suffered in the present crypto markets.

The US stock market also posted its largest sell-offs since June, after leading stocks like Google, Tesla, Apple retreated from all-time highs.

The strengthening US dollar and increasing exchange inflows contributed to the painful Bitcoin plunge.

Serious Bitcoin Warning

Peter Brandt sold all his Bitcoins as he has been extremely skeptical when it comes to the cryptocurrency’s future. In March this year, Bitcoin fell to $3,000 before bouncing back to $5,000. Peter warned traders that Bitcoin price may decline further in the future as below as $1,000.

He reasoned that cryptocurrencies and Bitcoin would not get their big break thanks to the problems with the fiat economy. He forecasted that in the future, the world would adopt the so-called SDRs (special drawing rights) global reserve unit based on multiple fiat currencies (GBP, USD, EUR, AUD, JPY, CAD, CNH, JPY, crude oil, silver, and gold. Bitcoin or other cryptocurrencies will not be part of the basket.