Bitcoin (BTC) is losing ground at the moment and appears to be in no shape to defend itself if major markets begin to crumble as a consequence of the US Dollar collapse. However, we have reasons to believe that it is going to be one of the top beneficiaries of the next global financial crisis. Even if we don’t go into detail of other causes and effects, we can clearly see that a fall in the value of the US Dollar (USD) is going to mean a rise in the value of Bitcoin (BTC) calculated in dollars. However, our analysis goes a lot farther than this. We are not talking about Bitcoin (BTC profiting only off a decline in the value of US Dollar (USD). If that were to be the case, Bitcoin (BTC) would still be worth the same in Euro (EUR) or Pound Sterling (GBP).
Considering the state of global economy and financial markets today, we believe that Bitcoin (BTC) is well positioned to be one of the best hedges against the upcoming crash. The price of Bitcoin (BTC) will rise not only from a decline in the value of US Dollar (USD) but it will rise as adoption grows massively before and during the next financial crisis. The dollar is in one of the worst states it has ever been. The weekly chart for the US Dollar Currency Index (DXY) tells us exactly what is going on. The price has plunged below the 200 Week MA and the 21 Week EMA which means it has just entered a downtrend after facing rejection at a very strong resistance level. The only strong support the DXY has at this point is in the 70s zone. This means that there is a lot of room for further downside.
While things do not look good for the US Dollar (USD) long term, things are looking great for BTC/USD. Let us now get down to why Bitcoin (BTC) might be one of the biggest beneficiaries of a dollar collapse. First of all, a collapse does not mean that the US Dollar (USD) will go to zero. This is a possibility, yes but the US Dollar is the global reserve currency. This means that a lot of countries across the globe are sitting on big piles of US Dollars. China and Japan are at the top of the list of those countries. Both of these countries have enjoyed a stronger dollar compared to their weaker currency because they export heavily to the United States and a strong dollar is good for their exports. Now, the problem is that the US has a debt problem of more than $20 trillion.
If the dollar keeps going up, the US would find it almost impossible to pay its debt. Other negative effects of a strong dollar for the United States are that its own export market will suffer and so will its stock market. It is in the best interest of the United States right now to keep the dollar weak but if China and Japan begin to catch America in the act, they might dump their dollars faster so their reserves do not lose too much value. China and the United States are both trying to move away from one another to look for other markets. However, all of this will be a slow process but the US Dollar (USD) will continue to lose its value in the meanwhile. As countries have different cultures, laws, religion, taxes, policies, objectives etc they cannot agree on one global currency. So, it is the people who will end up agreeing on one global currency and considering the adoption and acceptance Bitcoin (BTC) has seen over the years, it is very likely to become the one world currency.