Over the past week, Bitcoin has maintained a strong upward momentum, breaking many records in a row: in terms of currency value, it broke the $50,000 mark for the first time on the 16th, and has continued to rise all the way, up about 14% in a week as of the 19th, up nearly 80% this year; in terms of market value, it reached $1 trillion on the 19th, surpassing the technology giants.
The vast majority of listed companies outside.
When public opinion analyzes the hot market of Bitcoin, although it mentions the endorsement of well-known enterprises such as PayPal and Tesla, the admission of institutional investors and other supporting factors, it also points out that as a virtual currency that exists completely in digital form, Bitcoin speculates at such a price, which is the reflection of asset bubbles and has always been seen.
Just as the Bitcoin bubble will burst and when it will burst, the Financial Times issued a more far-reaching warning on the 15th: Bitcoin is not so much a bubble as the “last functioning fire alarm”, warning us that in the new world order, “America and the United States Yuan will play a less important role.
This warning is not alarmist, but an increasingly worrying about the hegemony of the dollar around the world recently.
From the economic point of view, due to the poor control of the epidemic, the economic recovery of the United States has been slow, shaking the economic foundation of the hegemony of the dollar.
Since the outbreak of the epidemic in March last year, the U.S. Congress has passed a total of about $4 trillion in stimulus plans, equivalent to one-fifth of the total U.S. economy. Despite this, the U.S. GDP contracted by 3.5% in 2020, making it the worst annual performance since the end of World War II.
If the absolute recession of the U.S. economy in 2020 is only accidental caused by the epidemic, then the relative recession of the U.S. economy is an irreversible trend compared with the emerging countries represented by China.
As the economic gap between China and the United States continues to narrow, the proportion of the United States in the global economy will further decline.
On the one hand, the economy is difficult to see the situation, and on the other hand, the debt has soared repeatedly. The size of U.S. Treasury bonds in 2020 is basically equal to the total economic volume.
At present, Biden’s new round of $1.9 trillion stimulus plan has not been passed, but the U.S. Congressional Budget Office predicts that the total amount of national debt will exceed GDP this year.
With the support of the hegemony of the US dollar, the United States continuously passes on its own borrowing costs to the world through debt monetization.
It is out of vigilance against the unlimited printing of banknotes in the United States and the depreciation of the US dollar that in the second half of last year, the price of gold, as a hedging asset, also hit a new high. At present, in the eyes of bullish people, Bitcoin is the “digital version of gold”.
In addition, political factors further exacerbated doubts about the dollar.
As the Financial Times said, over the past four years, Trump’s presidency and its “toxic” politics have damaged the world’s trust in the United States and weakened some people’s trust in the stability of the dollar as a global reserve currency.” The feeling peaked in the attack on the U.S. Capitol on January 6.
In fact, the “feeling” should go back to before Trump took office. Over the years, the United States has frequently “weaponized the US dollar”, taking advantage of the reality that cross-border payments mainly use the US dollar, and often intercepts foreign transactions of other countries as sanctions.
To this end, former U.S. Treasury Secretary Henry Paulson wrote a reflection last May: “Washington should remember that unilateral sanctions are achieved by the dominance of the dollar, but not without cost. Using the dollar as a weapon in this way will inspire America’s allies and opponents to support other reserve currencies, and they will even unite.”
Paulson’s words become a gull.
While Bitcoin is booming, all parties are also looking at other options to replace the dollar. On the eve of Biden’s inaugust, the European Union, as an ally of the United States, warned in a policy document that global markets were too dependent on the dollar, advocating that the euro play a greater role.
More countries, inspired by cryptocurrencies such as Bitcoin, plan to issue digital currencies by their central banks.
According to the latest statistics of the Bank for International Settlements, 62% of central banks with such plans have pushed digital currency to the empirical stage, an increase of 20 percentage points from a year ago, with emerging economies particularly positive attitudes.
The Bitcoin craze may subside, but the enthusiasm for aiming at the dollar and competing for thousands of sails, once aroused, is no longer easy to calm down.