Trump stated in a related announcement that Sacks will guide U.S. government policy on artificial intelligence and cryptocurrency, two areas crucial to America's future competitiveness. Sacks will establish a legal framework so that the cryptocurrency industry can achieve the clarity it requires and thrive in the U.S.
A new government with a strong cryptocurrency inclination
It is worth mentioning that Sacks's appointment marks the first time the U.S. federal government has a dedicated position responsible for cryptocurrency and artificial intelligence policy. Previously, Trump had stated during his campaign that he would establish a dedicated position to manage cryptocurrencies.
Sacks is a partner at a venture capital fund. Previously, Sacks played a key role in shaping the early fintech industry as the founding Chief Operating Officer of American payment platform PayPal. He later founded the enterprise social platform Yammer and sold it to Microsoft for $1.2 billion in 2012. He is also connected to the 'PayPal Mafia,' an unofficial club of notable tech figures and investors, including Musk and Peter Thiel, who worked at PayPal in the 1990s.
Earlier this year, Sacks became a major supporter of Trump, hosting a fundraising event for the then-Republican nominee at his mansion in San Francisco, with tickets priced at $50,000 each. In July, Sacks also spoke at the Republican National Convention held in Milwaukee.
Previously, Trump had just appointed cryptocurrency advocate Paul Atkins as the next chairman of the U.S. Securities and Exchange Commission (SEC), which caused a stir in the cryptocurrency community, with Bitcoin prices rising over 5.51% during Asian trading hours on the 5th, reaching a historic high of $101,092.4. Since Trump's election win on November 5, the overall market value of cryptocurrencies has surged by about $1.4 trillion, with Bitcoin, as the leader, showing particularly impressive performance.
Traditional institutions: The dollar will still dominate
However, although Trump and Musk, along with several nominated officials, are avid fans of cryptocurrencies and have recently taken frequent supportive actions towards them, Yicai has observed that traditional institutions still hold a conservative attitude towards cryptocurrencies.
In response to Yicai's related questions, UBS stated that despite the increasing changes in international relations concerning trade, currency, and sanctions, it believes that the dollar's dominance globally will continue for the next few years.
In UBS's view, first of all, the global monetary system is sticky. The dollar dominates financial markets and international trade. Historically, it takes a long time for the world's dominant currency to change. Regardless of the rise and fall of major economies, the status of a reserve currency often remains for a long time after its influence peaks. The latest survey by the International Monetary Fund on the composition of global foreign exchange reserves shows that the dollar's share held by central banks remains close to 60%, roughly stable over the past four years. According to SWIFT data, the dollar is also used for over 47% of global payments and dominates 84% of trade finance contracts. In contrast, the euro accounts for only 23% of global payments, with a trade finance share of just 6%. The shares for the yuan are less than 5% and 5%, respectively.
Secondly, liquidity is paramount, and the dollar still dominates in this regard. Liquidity ranks high among the monetary characteristics sought by global reserve managers and international trade participants. In this regard, the dollar remains the monopoly currency globally: according to the latest survey by the Bank for International Settlements, the dollar accounts for 88% of all transactions. The dollar also creates a deep derivatives market—such as forwards, swaps, and options—that allows market participants to effectively hedge risk exposure.
Finally, the stability and security of the U.S. are crucial. The political atmosphere and fiscal situation in the U.S. undoubtedly face challenges, but other competing currencies also face the same issues. The U.S. still ranks high in several institutional strength indicators such as market openness, regulatory quality and efficiency, and the rule of law. Against this backdrop, the U.S. continues to attract significant foreign investment. The AI technology revolution centered on the U.S. is consolidating its reputation as an innovative powerhouse and becoming a strong magnet for foreign capital. Of course, the U.S. must also be cautious about the privilege of issuing the world's major currency, the dollar. Excessive fiscal deficits and recurring debt ceiling issues are eroding market confidence. Foreign investors also seek assurances that the independence of the Federal Reserve will not be compromised.
For investors weighing their currency exposures, UBS expects that the dollar may receive good support in the short term, with many of Trump's early policies likely favoring the dollar.
Former Treasury Secretary Summers calls it 'too crazy'
Regarding cryptocurrencies, UBS told Yicai that as the market believes Trump supports digital assets, Bitcoin prices have indeed soared to historic highs. This increase is driven by Trump's campaign promises, including the establishment of a strategic Bitcoin reserve, while the market expects Congress to be more inclined to support cryptocurrencies in the future.
"However, we still tend to view crypto assets as a speculative trading tool rather than a strategically allocated asset in a portfolio. We are skeptical about the potential for crypto assets to achieve significant and disruptive breakthroughs in real-world applications, and this asset class may significantly increase portfolio volatility," UBS stated.
Using Bitcoin as an example, UBS explained that the performance of this cryptocurrency is positively correlated with global stock indices, with a correlation coefficient of 0.31 and an annualized volatility of 78.8%. This means that Bitcoin tends to fluctuate in the same direction as the market, but with significantly larger amplitudes. Since 2014, Bitcoin has experienced three major drawdowns exceeding 70%, averaging three years to recover. In contrast, UBS continues to be optimistic about global and U.S. stocks and believes that a favorable macro backdrop may further benefit stocks.
The biggest criticism from traditional institutions regarding cryptocurrencies—extreme volatility—does indeed exist. After Bitcoin broke through the $100,000 mark on the 5th, it fell back 7% in just one trading day, dropping below $100,000 again. The significant rise in Bitcoin on Thursday and its subsequent fall below $100,000 today caused about 200,000 people to be liquidated.
In addition to appointing cabinet members who support cryptocurrencies, Trump also proposed during his campaign that the federal government retain ownership of its Bitcoins. It is estimated that these Bitcoins amount to about 200,000 and were accumulated after asset seizures.
In response, former U.S. Treasury Secretary Summers denied the idea of the government establishing a Bitcoin asset reserve and warned that reducing federal spending according to the plan of Trump's ally Musk would face political challenges. He stated, "Some people say we should establish some form of national Bitcoin reserve; this idea is simply insane," adding, "There is no reason to do this other than to cater to generous special interest campaign donors."
"Supporting financial innovation is very important," but Summers said that it is necessary to distinguish between the need for the government to maintain national oil reserves and the need for a gold reserve established a century ago in Fort Knox. He also asked, "Among all the prices that need support, why does the government choose to support a pile of Bitcoin by accumulating useless inventory?"#加密沙皇 #亚马逊股东提议比特币投资 $BTC $BNB
