First Mover: Bitcoiners May Not Care if Dollar Keeps Its Reserve Status

What if the dollar keeps its reserve status? PLUS: FCA ban, McAfee arrest, commercial real-estate wipeout.

AccessTimeIconOct 6, 2020 at 12:48 p.m. UTC
Updated Sep 14, 2021 at 10:05 a.m. UTC

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."

Marc Chandler, chief market strategist at Bannockburn Global Forex and author of the book "Making Sense of the Dollar," talks with CoinDesk's Omkar Godbole about the future of the U.S. currency.
Marc Chandler, chief market strategist at Bannockburn Global Forex and author of the book "Making Sense of the Dollar," talks with CoinDesk's Omkar Godbole about the future of the U.S. currency.

Bitcoin Watch

Bitcoin daily and weekly charts.
Bitcoin daily and weekly charts.

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

Token Watch

Wrapped bitcoin (wBTC): Record $616M of wrapped bitcoin minted in September.

Ether (ETH): Futures contracts on BitMEX for Ethereum's native token drop by half in wake of U.S. regulators filing charges against Seychelles-based cryptocurrency exchange. 

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Chart from SEC report illustrating interconnections in U.S. commercial real-estate market.
Chart from SEC report illustrating interconnections in U.S. commercial real-estate market.

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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.