A major announcement of a move away from the U.S. dollar may mean major gains for cryptocurrency.
In case you haven’t been paying attention recently, crypto has been on a tear. Many of the coins that were beat up earlier in 2022 came roaring back in the new year. It may just be a phase — or could be the next bull market.
This may be closely tied with the push of multiple governments in the Middle East dumping the dollar as their reserve currency. This process of ‘de-dollarization’ may have major effects on crypto.
The Sheiks in the United Arab Emirates (UAE) or Saudi Arabia will want to store their currency reserves in foreign deposits. The Euro has been surprisingly weak since the start of COVID. So has the British Pound Sterling.
That leaves few options. The Russian Ruble is a mess. And the Chinese Yuan may be too unstable to touch. Many observers would point out that this leads to the U.S. dollar, the traditional rock of security in foreign exchange.
However, this isn’t quite the case anymore. The recent crypto lull gives an opportunity for the Gulf states to invest in crypto. There’s plenty of precedent for it — El Salvador invested in the cryptocurrency and recognized it as legal tender.
The U.A.E. announced that it would accept other forms of legal tender for their oil — including leaving the door open for cryptocurrency. This could mean the end of the U.S. dollar’s dominance in the oil trade. Usually, oil trades are done in dollars.
UAE Minister: Crypto will play a major role in UAE trade https://t.co/ncfPj3n5hw
— Bruce Fenton (@brucefenton) January 21, 2023
The leak of investment away from the U.S. dollar comes at a time when the economy is already flailing. High inflation is crushing consumers while low economic growth rates are harming the middle class.
All of this could be made worse by a flight of dollars out of the United States and to the Middle East. In addition, not having to use the U.S. dollar by other countries to buy fuel could also spike Bitcoin and other currencies.