A growing number of economists and analysts – and even the Wall Street firm Goldman Sachs – have speculated this year that the U.S. dollar might be on the cusp of losing its status as the dominant reserve currency for central banks around the world.
That possibility has helped to support this year’s 50% increase in prices for bitcoin, seen by many cryptocurrency investors as a hedge against a dollar devaluation.
But CoinDesk’s Omkar Godbole reported Tuesday that, according to one prominent foreign-exchange analyst, the dollar’s value could decline significantly even if the U.S. currency keeps its majority share of global central-bank reserves for the foreseeable future. As of the most recent data, the percentage is around 60%.
“Backing the dollar is the world’s biggest, deepest and the most transparent government bond market,” Marc Chandler, chief market strategist at Bannockburn Global Forex and author of the book “Making Sense of the Dollar,” told CoinDesk in a video chat on Wednesday. “I just don’t know how bitcoin can replace the greenback from that viewpoint.”
Bitcoin’s price bounce from Friday’s low of $10,380 looks to have stalled, and the cryptocurrency remains trapped in a contracting triangle or a narrowing price range.
Such low-volatility price consolidations often end with a violent move on either side.
Some investors may be anticipating a range breakdown, given the weekly chart MACD histogram has crossed below zero, a sign of a bearish shift in momentum.
The indicator, however, is based on backward-looking moving averages and lags prices. As such, its reliability is under question.
Besides, broader sentiment in the options market is bullish, according to three- and six-month put-call skews, which measure the cost of puts relative to calls.
Further, on-chain data shows the market is currently witnessing a bigger influx of new investors than it did at the height of the bull market frenzy in late 2017. That is a major bullish sign, according to popular analyst Willy Woo.
– Omkar Godbole
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