U.S. Treasury secretary Janet Yellen has warned countries around the world are moving away from the U.S. dollar—as the spiraling $34 trillion U.S. debt pile fuels fears of collapse—with bitcoin and crypto slowly chipping away at dollar dominance.
The bitcoin price has rocketed over the last year, climbing despite a “critical” Federal Reserve warning, and helped by bettors who are increasingly confident former U.S. president Donald Trump will retake the White House in November.
Now, as the radical Project 2025 policy plan puts bitcoin on a collision course with gold, Yellen has said she fears U.S. financial sanctions will reduce the role of the dollar around the world, as Russia encourages the use of bitcoin and crypto.
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US Treasury secretary Janet Yellen has warned U.S. dollar dominance will continue to decline as … [+]
“We have very powerful sanctions that are available because of the important role of the dollar in international transactions,” Yellen told U.S. lawmakers on the House financial services committee this week.
“The more we have used sanctions, the more countries look for ways to engage in financial transactions that don’t involve the dollar.”
The U.S. has targeted Russia and Iran with strict financial sanctions in recent years, leading to accusations it’s weaponizing the dollar and pushing the so-called Brics group of up-and-coming countries away from the western financial system.
The Brics, initially made up of Brazil, Russia, India and China before being joined by South Africa and then Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates (UAE
iShares MSCI UAE Capped ETF
The U.S.-led western financial sanctions “will have a certain impact on the international status of the U.S. dollar,” Zhao Qingming, a Beijing-based financial expert told the China newspaper Global Times. “In the short term, the position of the U.S. dollar should remain stable, but over time, its position may weaken.”
Earlier this month, Russia’s central bank encouraged the use of bitcoin and crypto to counter Western sanctions imposed over the Ukraine conflict.
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The bitcoin price has swung wildly in recent years, rebounding as fears swirl over the future of the … [+]
“New financial technology creates opportunities for schemes which did not exist before. This is why we softened our stance on the use of cryptocurrencies in international payments, allowing the use of digital assets in such payments,” Elvira Nabiullina, governor of Russia’s central bank, reportedly told a financial conference in St.Petersburg.
Fresh fears of U.S. dollar collapse come as some bitcoin and crypto traders bet the bitcoin price will soar to an all-time high ahead of the U.S. election in November.
In a July 2 note seen by The Block, Standard Chartered’s head of forex and crypto research Geoffrey Kendrick predicted “a fresh all-time for bitcoin in August is likely, then $100,000 by U.S. election day,” adding: “The logic here is that both regulation and mining would be looked at more favourably under Trump.”
Kendrick has said he expects to see the bitcoin price reach $150,000 by the end of 2024 and hit $200,000 before the end of 2025—which would give bitcoin a market capitalization of around $4 trillion.
Trump has emerged as the preferred candidate for the bitcoin and crypto community— promising to protect people’s right to hold bitcoin and being announced as a headline speaker at the Bitcoin 2024 conference later this month—and putting him starkly at odds with the Biden administration’s anti-crypto stance.
