Preamble: Not interested in opinions whether this scenario (below) will happen. I’m curious to learn how crypto would likely react if this scenario happens.

Context: Given recent political events in the US, there is spreading opinion that the international community is moving away from the US Dollar (USD) as its main reserve currency. The USD has long been the backbone of international trade, investment, and reserves: Countries buy USD and US debt; nations and corporations trade oil in USD; as we all know, international crypto prices are generally shown in USD and only then calculated at local currency prices via the exchange rate. (E.g.: In Canada, exchanges list BTC/USD and then calculate the USD:CAD exchange rate to show the effective BTC/CAD rate.)

Observation: USD has been falling in value steadily for the last year (as countries lose confidence in the U.S. and its currency) with a brief relief rally in Q3 before falling again in Q4.

The Scenario: Imagine the international community chooses to drop the USD (or slow down its usage) and so the USD plummets in value on the world stage over the next year or two.

Question: What’s more likely? A) Cryptocurrencies drop in value in lockstep with dropping USD rates? B) Cryptocurrencies rise in value, as USD becomes worth less in comparison? C) Something else I’m not thinking about?

I’d assume B but curious if others have reasons/evidence to justify this assumption or if it’s incorrect. Thanks in advance.

submitted by /u/DrCrazyCurious [link] [comments]r/CryptoCurrencyRead More

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