Citi Wealth strategists believe that stablecoins not only have the potential to strengthen the dominance of the U.S. dollar but also challenge the idea that Bitcoin will one day end the dollar's hegemony. (Background: Fed Governor Christopher Waller: Dollar stablecoins enhance 'dollar dominance', global reserve currency status remains intact) (Additional context: Stablecoins may replace sovereign currencies! IMF: Countries face significant fiscal impacts) Citi Wealth has stated in a newly released report that the growth in stablecoin adoption will not harm the dollar; rather, it may 'consolidate the long-term global dominance of the dollar' and challenge the notion that Bitcoin will end dollar hegemony. According to The Block, Citi Wealth strategists wrote in their report: 'Initially, cryptocurrencies like Bitcoin were seen as competitors to central bank-issued currencies. In fact, some people believe (and continue to believe) that Bitcoin may end the dollar's hegemony; however, stablecoins, which account for over 80% of cryptocurrency trading volume, are challenging this notion.' Citi: Stablecoins challenge the view that 'Bitcoin will end dollar hegemony' Citi pointed out that the vast majority of stablecoins are pegged to the dollar, with issuers purchasing dollar cash and U.S. Treasury bonds as reserves to support the stablecoins. If the U.S. government takes actions to further legitimize stablecoins, this could further consolidate the dollar's dominance. Clearer regulations may also enhance the appeal of stablecoins. If this happens, the demand for U.S. Treasury bonds from stablecoin issuers may increase from the current purchase volume of about 1%. Therefore, stablecoins will not replace the dollar but can make it easier for the world to use the dollar, thereby consolidating the dollar's long-standing global dominance. The adoption of stablecoins has been on the rise in recent years, with Citi reporting: 'Stablecoin trading activity has reached historic highs, with transaction volumes hitting $5.5 trillion in the first quarter of 2024. In comparison, credit card giant Visa's transaction volume during the same period was about $3.9 trillion. To respond to this challenge, Visa, PayPal, and other traditional payment providers are issuing their own stablecoins or settling transactions using stablecoins from other companies to adapt to this trend.' Does Trump also agree that stablecoins will consolidate dollar hegemony? Notably, Trump, who wants to maintain the dollar's global dominance, supports Bitcoin and clearly does not believe that 'Bitcoin will challenge the dollar's status.' He may even share similar views with the Citi report. Trump plans to make the U.S. the global cryptocurrency hub, taking the lead in dominating the future cryptocurrency landscape and sticking to his political stance against the Fed's introduction of a CBDC digital dollar, which may further promote the legitimation of dollar stablecoins and their adoption in the global market, indirectly achieving his goal of consolidating dollar hegemony. Fed Governor Christopher Waller has also publicly stated this year that people often speculate that cryptocurrencies like Bitcoin may replace the dollar as the world's reserve currency, but he disagrees. Most DeFi transactions involve stablecoins, with 99% of the market value of these tokens pegged to the dollar. Therefore, any growth in DeFi transactions is likely to further strengthen the dollar's dominance. Further reading: DeFi stablecoin monthly trading volume first 'surpasses $700 billion', rivaling Visa. Standard Chartered: Trump's tenure will see market value increase tenfold. IMF warns that stablecoins will challenge fiat currency status. However, Citi strategists believe that the view that 'stablecoins will consolidate dollar global hegemony' is clearly contrary to the International Monetary Fund (IMF). The IMF has repeatedly warned in recent years that stablecoins could potentially replace national sovereign currencies and must be closely regulated, advocating that countries actively launch their own central bank digital currencies (CBDCs) to address the challenges posed by the rise of various digital payment options like stablecoins and cryptocurrencies that may lead to the decline of physical cash. In contrast, the IMF is less concerned about the possibility of 'Bitcoin replacing fiat currency.' A report by Morgan Stanley earlier this year noted that the rise of Bitcoin, stablecoins, and CBDCs has the potential to drive global 'de-dollarization,' but IMF President Kristalina Georgieva has scoffed at this, emphasizing that there is little concern about the issue of Bitcoin competing with the dollar and highlighting that cryptocurrencies are assets, not currencies, and still far from rivaling the dollar. Further reading: Stablecoins may replace sovereign currencies! IMF: Countries face significant fiscal impacts. Samson Mow predicts a future of 'hyper Bitcoinization,' with a sharp decline in demand for fiat currency. However, Bitcoin OG and the driving force behind El Salvador's Bitcoin legalization, Samson Mow, boldly predicted during an interview earlier this year that 'Bitcoin will replace the dollar,' suggesting that stablecoins and Bitcoin may coexist for a time until we reach a tipping point of 'hyper Bitcoinization,' at which point Bitcoin will become the primary medium of value storage and transaction, leading to a significant reduction in demand for fiat currencies. Further reading: Exclusive interview) Samson Mow, the 'Bitcoin legalization advocate' from El Salvador, predicts dollar zeroing: BTC will break $1 million, Ethereum is just a game. Related reports: Will Bitcoin replace fiat currency? Economic giants pour cold water: 'Purchasing power volatility' makes BTC hard to become a popular medium of exchange. Can Bitcoin challenge fiat currency? Fed's seven charts tell you that replacing the dollar is an 'impossible mission'! Circle CEO: The peak of stablecoins is yet to come! Expected to increase to $13 trillion in ten years, potential surpassing CBDCs. South Korea's largest crypto venture capital: Ripple started by selling XRP to local grandmas through a Ponzi scheme. 'Citi: Bitcoin will not end the dollar; the proliferation of stablecoins will instead consolidate the dollar's dominant position' was originally published on BlockTempo (BlockTempo - the most influential blockchain news media).

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