Morgan Stanley said the dollar's global dominance is threatened by the rise of Bitcoin and the eventual proliferation of CBDCsCover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.Wall Street giant Morgan Stanley believes the rise of Central Bank Digital Currencies (CBDCs) and digital assets like Bitcoin and stablecoins could potentially disrupt the U.S. dollar’s longstanding dominance in the global economy.The lender made the analysis in a recent report titled “Digital (De)Dollarization?” — which highlights the disproportionate influence of the U.S. dollar in global finance and the existential threat posed by digital currencies and CBDCs.Dollar’s slipping dominanceDespite the U.S. contributing about 25% of global GDP, the dollar constitutes nearly 60% of global foreign exchange reserves. However, this dominance is now under scrutiny, partly due to the U.S.’s growing twin deficits and strategic economic sanctions prompting nations to seek dollar alternatives.The European Union and China are making strides to bolster the euro and yuan in international trade. The EU focuses on enhancing the euro’s role, especially in energy and commodity transactions. China is promoting the yuan through its Cross-Border Interbank Payment System, challenging the dollar-centric payment systems.Meanwhile, other countries have created the BRICS organization to develop non-dollar methods of trade among each other, while Russia has been looking into using private digital currencies for some cross-border trades.The report suggests that the ascent of digital currencies and CBDCs represents a significant challenge to the traditional dominance of the dollar in international finance. These emerging technologies offer more efficient, transparent, and accessible financial solutions, potentially reducing reliance on traditional banking systems and the dollar in international transactions and reserves.Rise of the digital currenciesThe report analyzes the potential impact of these digital currencies and CBDCs on the global financial system. It posits that as these technologies gain acceptance and usage, they could offer practical alternatives to traditional cash and fiat currencies.This shift is poised to reduce the reliance on the dollar for international transactions and central bank reserves, potentially altering the balance of global economic power.According to the report, Bitcoin, with its decentralized nature and capped supply, has evolved from a niche online concept to a globally recognized asset, with an adoption rate of 106 million owners worldwide. The flagship cryptocurrency’s expanding global reach and national adoption by countries like El Salvador as legal tender signals a historic shift in national financial strategies.Morgan Stanley also pointed to the growing usage of stablecoins, which accounted for transactions amounting to $10 trillion in payments in 2022, as another sign of the shifting landscape. Stablecoins are increasingly becoming the go-to payment method due to their 24/7 access and instant settlement.Furthermore, their integration into payment systems of companies like Visa and PayPal is another sign of their growing importance in the global financial ecosystem.CBDCs could supplant the dollarThe report also delves into the rapid development of CBDCs and their potential impact on the dollar’s market dominance.Over 111 countries are exploring these digital versions of their national currencies, which could revolutionize financial systems. China’s digital yuan and Brazil’s DREX are examples of how CBDCs could facilitate more efficient and inclusive financial transactions.According to Morgan Stanley, the rise of CBDCs could streamline cross-border payments, reducing reliance on traditional financial intermediaries like SWIFT and, by extension, the use of dominant currencies like the dollar.The report points to the mBridge project, involving central banks from multiple countries, as an example of how CBDCs can facilitate efficient cross-border settlements using smart contracts.Morgan Stanley’s analysis points to a future where CBDCs and other private digital currencies offer viable alternatives to traditional cash and fiat currencies. This shift could gradually reduce the dollar’s role in international finance, influenced by digital innovation and shifting geopolitical dynamics.#BTC #Dollar

Babel Finance blamed its trading desk’s $766 million loss on co-founder Wang Li. 

Yang Zhou, the sole director of Babel is planning to file a moratorium of protection from creditors.

Yang plans to restructure Babel Finance through a stablecoin ‘Hope,’ that uses Bitcoin and Ethereum as collateral. 

Babel Finance owes $766 million to creditors after running an order-book deficit of $766 million using customer funds. The company’s proprietary trading desk lost customer funds to risky trading activities that Babel attributes to co-founder Wang Li. 

Babel Finance alleges co-founder Wang Li of losing $766 million to trading activities

Babel Finance was hit by a #crypto2023  market meltdown after the firm’s proprietary trading desk ran up an order-book deficit of $766 million using customer funds. A recent filing by Babel alleges that co-founder Wang Li who was removed from the company’s leadership in December was responsible for the losses, contending that “the risky trading activities appear to have been instructed solely by Wang.”

According to a document viewed by Bloomberg News, the crypto financial service provider has proposed the repayment of debt owed to creditors with revenue generated by a new decentralized finance project minting “Babel Recovery Coins.”

The executive believes a new stablecoin can resolve the troubled crypto lender’s financial crisis. Yang is working on filing a moratorium of protection to the high court of Singapore, asking creditors not to take further action against the company for up to six months, while seeking approval for a restructuring plan. 

The repayment plan with the new stablecoin to pay back creditors

The plan details a new project, Hope's namesake stablecoin that uses Bitcoin and Ether as collateral, and maintains its value close to a dollar through arbitrage incentives for traders. Popular stablecoins pegged to the US #Dollar are fully backed by cash and cash-equivalent assets, in contrast to this Babel’s new #Stablecoins would use #BTC or #ETH as collateral. It remains to be seen whether a stablecoin can assist in restructuring the $766 million debt that Babel owes to its creditors. 

Dollar-cost averaging (DCA) is an investment strategy designed to mitigate the impact of market volatility by purchasing a fixed amount of an asset at regular intervals. By adhering to a consistent investment schedule, DCA aims to smooth out the average purchase price of the asset.

The fundamental principle behind DCA is to reduce the potential negative impact of making a single lump-sum investment at an unfavorable time. By spreading the investment over multiple purchases, DCA seeks to minimize the risk associated with timing the market. Instead of trying to predict the optimal entry point, investors who employ DCA focus on consistently accumulating the asset over time.

Dollar-cost averaging is particularly suited for long-term investments where the goal is to accumulate assets gradually. By purchasing the asset at regular intervals, regardless of its current price, DCA allows investors to benefit from both market downturns and upswings. During market downturns, the fixed investment amount buys more units of the asset, while during upswings, it buys fewer units. This approach helps to smooth out the average cost per unit over the long term.

However, it is important to note that dollar-cost averaging does not completely eliminate investment risk. Market fluctuations and unpredictable price movements can still impact the overall performance of the investment. DCA is not a guarantee of success, and other factors such as thorough research, asset selection, and portfolio diversification should also be considered when making investment decisions.

Dollar-cost averaging is a strategy that provides a disciplined approach to investing, helping to reduce the impact of emotional decision-making and market timing errors. It offers investors the potential to build a position in an asset gradually, leveraging the power of compounding over time.

#webgtr #dollarcostaveraging #Dollar #costs #bitcoin