Bitcoin, along with other major currencies such as ethereum and XRP, has surged this year. Bitcoin prices have just had a "turning point" worth $4,000 billion, while ethereum, XRP and other major cryptocurrency are preparing for a blockbuster on Wall Street - Forbes reported on June 16.
Now, after the US Federal Reserve (FED) quietly acknowledged that gold is replacing the US dollar, the International Monetary Fund has warned of a "shocking" decline in the share of the US dollar in foreign exchange reserves of central and government banks.
It is noteworthy that the role of the US dollar in the past two decades has not matched the increase in the proportion of other major currencies such as the euro, yen and British pound, IMF economists Serkan Arslanalp, Barry Eichengreen and Chima Simpson-Bell wrote in a report published on the IMFs website.
In contrast, it comes with an increased proportion of what we call non-traditional reserves, including the Australian dollar, the Canadian dollar, the Chinese yuan, the Korean won, the Singapore dollar and Nordic currencies, they wrote.
According to economists, new digital financial technologies such as creating automated markets and automated liquidity management systems have contributed to that change.
In early June, the New York Federal Reserve released a draft report on "the decline in the share of the US dollar in official reserves and the growing role of gold reserves for central banks", saying that this is not a general trend but only the actions of a small group of countries.
However, some commentators disagree with the New York Fed's assessment.
The Fed now recognizes some countries are turning to gold, technology investor and former CEO of Coinbase Balaji Srinivasan posted on X, pointing to what the Fed says is a small group representing 3 billion people, or 37.5% of the world, turning from the US dollar to gold.
adventure investor Chamath Palihapitiya - founder and CEO of Social Capital - predicts that Bitcoin could completely replace gold when countries use this digital currency, potentially pushing Bitcoin's market capitalization to 15.7 trillion USD.
The decline in the USD comes as the US Federal Reserve is preparing to cut interest rates after a two-year fight against inflation due to the consequences of stimulus and pre- printing measures during the COVID-19 period.
Central banks around the world have started cutting interest rates, which shows a broader monetary easing trend, said analysts at the Bitcoin and Bitfinex exchanges.
Fed Chairman Jerome Powell said last week that the Fed will cut interest rates at least once this year after the European Central Bank (ECB) cut interest rates in the Eurozone earlier this month.
There are clear signs that the Bank of England and the Federal Reserve will follow the ECB in the coming months, added Bitfinex analysts. The global liquidity cycle shows that money supply is likely to increase, which could support asset prices, including cryptocurrencies.
In Vietnam, representatives of the State Bank have repeatedly sent out the message: Bitcoin and other similar virtual currencies are not legal currencies and payment methods in Vietnam.
The issuance, supply, and use of Bitcoin and other similar cryptocurrencies as a means of payment is an act that is not in accordance with current law.
