Bitcoin could become a rival to the dollar and strip it of its century-long dominance as the reserve currency. According to Morgan Stanley Investment Management’s chief global strategist Ruchir Sharma, this is possible thanks to Bitcoin’s growing role as a means of payment.
In an FT-authored piece “Will Bitcoin end the dollar’s dominance?” Sharma criticises US authorities for the policy of flooding the financial system with “countless banknotes.” The expert noted competition from the euro and Chinese yuan, and still-low trust in them, which allows the US government and the Fed to abuse current policy.
“Officials are confident that in response to the COVID-19 pandemic they can print dollars in unlimited quantities without undermining its status as a reserve currency. They believe this will allow the country to sustain a large deficit without visible consequences. But these same factors have revealed to the world other dollar competitors — cryptocurrencies.”
Working in peer-to-peer networks, not controlled by any state, cryptocurrencies are pitched by their supporters as decentralised, democratic alternatives. Sharma sees in the response of the Fed and other central banks to the pandemic, leading to the devaluing of national currencies, that has forced people to rethink what Bitcoin is. The strategist saw in this ‘fuel’ for the first cryptocurrency’s price rise from March lows by about 400%.
He noted persistent scepticism about the thesis that Bitcoin is ‘digital gold’. The reason lies in its daily fluctuations, which still on average remain four times higher than those of the precious metal. But the expert noted a gradual shift, citing Cornerstone Advisors’ study. Its authors found cryptocurrency holdings in the portfolio of every fourth миллениала.
The warming mood toward Bitcoin comes as US debt climbs, which Sharma says is itself an indicator of a looming crisis. Such laxity over the expansion of budget deficits is characteristic of other countries as well. The strategist believes this gives the first cryptocurrency a ‘significant chance’ to replace the dollar as a global means of settlement.
“Today most bitcoins are held as investments, not used to pay bills, but the situation is gradually changing,” Sharma noted.
Earlier, billionaire investor and founder of Bridgewater Associates Ray Dalio назвал bitcoin «interesting» alternative to gold.
BlackRock chief Larry Fink допустил превращение биткоина в актив глобального рынка.
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