⚠️ However, these pillars are being challenged, and there are currently many signs indicating that the likelihood of a dollar crisis is increasing:
1. Debt Explosion
• The U.S. federal debt has reached $34 trillion, with daily interest payments amounting to $2.4 billion.
• In the next decade, interest payments on national debt are expected to reach $12.9 trillion, which is equivalent to twice the size of Switzerland's GDP today.
2. Accelerating De-dollarization
• China, Russia, the Middle East, and the European Union are advancing local currency settlements, signing agreements to reduce dependence on the dollar.
• Between China and Russia, energy trade has completely detached from the dollar system, and this trend is spreading globally.
3. Response of the Trump Administration
• The Trump administration seems to have long recognized the seriousness of the issue. He even proposed the establishment of a "Department of Government Efficiency" (DOGE) and appointed Elon Musk as the head, hoping to delay the crisis by cutting fiscal expenditures.
• Musk's extremely efficient management style and ability to drive technological innovation may be aimed at preventing a more severe financial collapse.
4. Global Economic Recession Pressure
• The high-interest-rate environment increases the debt costs for businesses and households, and signs of weakness in the U.S. economy are evident. Non-farm employment growth has significantly decreased, and the unemployment rate has risen to 4.3%.
• The trust foundation of the dollar (low debt, high economic growth) is gradually shaking.
-------- 📖 ------------
😱 If the dollar really faces a crisis, or even a brief decoupling, what impact would it have on cryptocurrencies?
Note that the following are my personal irresponsible views and do not constitute financial advice.
Negative Impacts
1. Stablecoin Collapse
• Stablecoins such as USDT and USDC operate based on the dollar system, and a dollar crisis would render the anchoring mechanism of these stablecoins ineffective. The "stablecoins" in users' hands may become worthless.
2. Short-term Market Volatility
• A dollar crisis will trigger severe fluctuations in global capital markets, and the crypto market will also find it difficult to remain unscathed, potentially facing the impact of panic selling in the short term.