Bitcoin and Economic Perception
CryptoQuant CEO Ki Young Ju believes that the Bitcoin policies of President-elect Donald Trump would be centered on the global perception of the United States economy and the US dollar. According to Ju, assets like Bitcoin and gold usually gain traction when investors see threats to US economic dominance. However, the current global confidence in the US dollar as a safe haven currency suggests that the Trump administration may not prioritize Bitcoin adoption.
Ju said that, as Trump always emphasizes the gap of power between the US and other nations, combined with higher capital inflow into the dollar, could further reinforce the supremacy. This may incentivize avoidance of any policy that will favor Bitcoin since USD is the king in most financial transactions around the world. Even in South Korea, most investors prefer the US dollar over gold or Bitcoin due to the weakening won,” Ju added, to point out the strong appeal of the dollar as a stable store of value.
Stablecoins Reinforce US Dollar Dominance
The CEO of Paxos, Charles Cascarilla, has stated that stablecoins really extend the dominance of the U.S. dollar and are integral to the blockchain economy. He told the Bitcoin MENA conference that, accordingly, with the speed and global connectivity of the internet, dollar-pegged stablecoins increase the functionality of the US dollar to keep it relevant in the changing financial world.
In particular, stablecoins have become very instrumental in economies that are suffering from instability.
- Turkey: With 67% inflation in March 2024, Turkish residents have resorted to stablecoins, which dominate crypto transactions relative to GDP.
- Latin America: More than 50% of crypto transactions in countries such as Argentina and Venezuela involved stablecoins, according to a report by Chainalysis in 2023, reflecting their value as a hedge against hyperinflation and currency devaluation.
The Future of Blockchain and Fiat Currency
As blockchain technology continues to grow, many fear that overcollateralized stablecoins will further entrench the US dollar’s dominance; this is an evolution that has allowed fiat currencies to thrive in the digital economy while catering to increasing interest in decentralized assets like Bitcoin.
While Bitcoin adoption may increase due to economic uncertainty, the unique position of the US dollar as a safe haven is further cemented by the integration of stablecoin, thus ensuring its strength in global markets during the Trump administration.
