The impact of economic and geopolitical changes on cryptocurrencies.
Amid global geopolitical shifts, there are questions about the future of the “petrodollar” agreement that links Saudi oil exports to the US dollar. Saudi Arabia has already begun to diversify its trading partners, including strengthening ties with China and Russia, and working on trade deals in currencies other than the dollar. For example, Saudi Arabia has signed agreements to sell oil in yuan with China, indicating a possible reduction in dependence on the dollar.
This trend could reduce global demand for the dollar and affect its status as a major reserve currency. Such a change could lead to volatility in financial markets, prompting investors to seek safe-haven assets such as gold and bitcoin, which are seen as inflation-resistant alternatives to central bank policies.
The important question is 👇🏼
Could stablecoins like USDT and USDC be affected?
Stablecoins, such as USDT and USDC, rely on the US dollar to maintain their fixed value (1:1). Any changes affecting the dollar will directly or indirectly affect these coins.
Market volatility: Stablecoins have experienced brief deviations from their target value during financial crises. For example, USDC briefly lost its peg to the dollar in March 2023 due to a default by one of the banks holding its reserves, but recovered after market intervention.
Regulatory risks: Stablecoins are under increasing regulatory pressure that could affect investor confidence in them.
Investors turn to alternatives: In times of economic uncertainty, investors may turn to Bitcoin or precious metals like gold and silver as safe havens. Bitcoin, in particular, is seen as a hedge against inflation and the devaluation of fiat currencies, which could increase its popularity as a digital alternative.
We understand from that
Changes in the adoption of the dollar as a major currency, whether due to the restructuring of petrodollar relationships or regulatory pressures on stablecoins, could have a significant impact on the global financial system. Cryptocurrencies, especially Bitcoin, could become the preferred alternative in these scenarios as a tool for storing value and long-term investment.
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Sources:
CoinDesk . CryptoNews. Bloomberg
The Guardian .Financial Times
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