CryptoQuant CEO and founder Joo Ki-young said President-elect Donald Trump’s Bitcoin (BTC) policies will likely depend on the perceived strength of the U.S. economy and the U.S. dollar by the global investment community.
Professor Joo argued that when investors perceive a threat to U.S. economic hegemony, the prices of store-of-value assets such as gold and BTC soar. However, investors continue to express confidence in the U.S. economy and view the U.S. dollar as a safe haven currency.
The CEO said this strong stance makes it unlikely that the Trump administration will adopt a Bitcoin strategic reserve to protect the US dollar’s dominance and could lead to the president-elect rolling back BTC-friendly policies. The CEO wrote:
“Even before taking office, Trump has consistently warned other world leaders about the power gap between the United States and other countries. This rhetoric, combined with increased capital inflows into the dollar, could reignite confidence in the dollar’s hegemony. “
Representative Lee said, “There are many Koreans around me who choose the U.S. dollar as a safe asset instead of gold or Bitcoin, especially as the won weakens.” This trend is also seen in emerging economies where individuals are using US dollar stablecoins to store value.
The Dollar Strength Index shows that the US dollar has been strengthening since October 2024. source: TradingView
relevant: The US government will not purchase Bitcoin in 2025 — Galaxy Research
Overcollateralized Stablecoins Extend US Dollar Dominance
Paxos co-founder and CEO Charles Cascarilla told Cointelegraph at the recent Bitcoin Middle East and North Africa (MENA) conference that the entire financial system will eventually become on-chain.
Cascarilla said stablecoins pegged to the dollar will be the cornerstone of the blockchain economy and will enhance the utility of the U.S. dollar by giving fiat the speed and global connectivity of the internet.
Individuals in jurisdictions experiencing hyperinflation tend to use the U.S. dollar as a store of value against rapidly declining local fiat currencies.
In March 2024, the inflation rate of the Turkish lira reached a whopping 67%. Not surprisingly, Turkey has the highest stablecoin purchase rate in the world as a percentage of gross domestic product (GDP).
According to Chainalytic’s 2023 report, more than 50% of digital assets transferred to Latin American countries, including Argentina, Brazil, Colombia, Venezuela, and Mexico, were stablecoins.
magazine: Bitcoin Investors Are ‘All In’ on Trump After Bitcoin ’24, but It’s Getting Risky.