The world’s largest asset manager with $9 trillion in assets, claims that Bitcoin can serve as a solution to the growing global financial instability, as a hedge against the rising uncertainty and geopolitical issues that are eroding trust in governments, banks, and traditional currencies. They’re probably right.
Bitcoin as the global monetary alternative
BlackRock describes Bitcoin as a global monetary alternative. We could end this article here, as complete, but there is more!
Since the launch of their Bitcoin ETF in January 2024, Bitcoin’s price surged to an ATH of over $73,000, making the fund one of the top performers in the market.
The fast growth of the IBIT ETF and other cryptocurrency-based ETFs has sparked heated discussions within the financial sector, as now cryptocurrencies are increasingly viewed as alternatives to fiat currencies, especially amid concerns regarding the stability of the U.S. dollar.
The dollar remains dominant, but there are clear efforts to diversify.
Dollar’s reign is almost over, it’s time for a new reserve currency? Hold on!
Central banks are looking into digital currencies to shield themselves from a potential collapse of the dollar while also adopting new technologies like blockchain and cryptocurrency.
On the other hand, in short term the USD shows some strenght lately. The dollar rose by 0.38% against the yen, trading at 142.905 after dipping to 140.71, its lowest point since December.
The euro is trading at $1.1007, close to its weakest level since August. Similarly, the British pound has also weakened, now at $1.30360, a low not seen since late August.
The U.S. consumer price index, aka inflation increased by 0.2%, matching July’s rise. Core CPI, which excludes volatile food and energy prices, rose by 0.3%, indicating a faster increase compared to July’s 0.2%.
This data has shifted expectations regarding the Federal Reserve’s rate cuts next week. Many economists now anticipate that the Fed will implement a smaller rate cut of 25 basis points, with the likelihood of this cut rising to 80%.
While there remains a possibility of a 50-basis point cut, that chance is pretty small.
Economic slowdown, growing inflation, global instability
The International Monetary Fund recognized the beginning of the Fed’s rate-cutting cycle as necessary, believing it will help alleviate the economic slowdown while managing inflation.
Yet, they also warn that the Fed must remain flexible and ready to adjust to changing economic conditions.
As Bitcoin gains traction as a hedge against financial instability, it may attract more investors looking for security in these uncertain times, and their action may affect the wider finance industry.
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