A number of financial analysts are now saying the world is “drowning in U.S. dollars” creating macroeconomic conditions that will prove to be favorable for bitcoin and other store-of-value assets.
According to a report by Bitcoin.com, the Federal Reserve’s decision to pump trillions of dollars into central banks to combat the economic fallout of COVID-19 has created the conditions for a massive slide in the value of US fiat moving forward.
The report claims both gold and bitcoin prices rose this week ahead of a meeting by members of the U.S. Federal Reserve. In comparison, the US Dollar Index (DXY) has shown signs of weakness for the world’s reserve currency, losing massive amounts of value throughout 2020.
Business analyst Stephen Bartholomeusz, writing for the Sydney Morning Herald, said the world has been “drowning in U.S. dollars” via liquidity swaps.
He said,
The combination of the access to dollars, the extent of the monetary policy stimulus in the U.S. and the Fed’s recent decision to hold U.S. rates at their current negligible levels – negative in real terms – has seen the U.S. dollar depreciate about 9.3 percent against the basket of its major trading partners’ currencies since March 19.
He continued, saying the dollar had fallen to its weakest level in over two years while adding that the DXY could see a sharper fall in the near future.
Featured Image Credit: Photo via Pixabay.com
