As the world waits with bated breath for President-elect Donald Trump’s Bitcoin policies, Ki Young Ju, the CEO and founder of CryptoQuant, has offered some valuable insights that warrant closer examination. In a recent statement, Ju argued that the perceived strength of the United States economy and the US dollar by the global investment community will likely dictate Trump’s approach to Bitcoin.
The Store-of-Value Assets: A Historical Perspective
According to Ju, store-of-value assets like Gold and BTC tend to surge in price when investors perceive threats to US economic hegemony. This phenomenon has been observed time and again throughout history, where the value of these assets increases as a hedge against inflation, currency devaluation, or economic uncertainty.
However, as Ju pointed out, investors continue to express confidence in the US economy and see the US dollar as a safe haven currency. This unwavering faith in the dollar’s strength is likely to influence Trump’s policies on Bitcoin.
The Dollar Strength Index: A Visual Representation
The dollar strength index, which measures the relative value of the US dollar against other major currencies, shows that the dollar has been gaining strength since October 2024. This trend is a stark reminder of the perceived confidence in the dollar’s supremacy.
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Overcollateralized Stablecoins: The Rise of Dollar Dominance
Charles Cascarilla, co-founder and CEO of Paxos, recently shared his vision for the future of finance at the Bitcoin Middle East and North Africa (MENA) conference. He firmly believes that the entire financial system will eventually be on-chain, with dollar-pegged stablecoins playing a crucial role in this transition.
By bringing the speed and worldwide connectivity of the internet to fiat currency, these stablecoins will improve the utility of the US dollar and reinforce its position as a global reserve currency.
Stablecoins and Hyperinflation: A Match Made in Heaven?
Individuals living in jurisdictions experiencing hyperinflation tend to use the US dollar as a store of value against rapidly depreciating local fiat currencies. This trend is evident in countries like Turkey, where the inflation rate hit a staggering 67% in March 2024.
Turkey has the highest rate of stablecoin purchases, expressed as a percentage of gross domestic product (GDP), in the world. This phenomenon highlights the growing reliance on dollar-pegged stablecoins as a safe haven asset class.
Latin America’s Stablecoin Adoption: A Growing Trend
A 2023 report from Chainalysis revealed that over 50% of the digital assets sent to Latin American countries like Argentina, Brazil, Columbia, Venezuela, and Mexico were stablecoins. This trend underscores the increasing adoption of stablecoins in regions plagued by economic uncertainty.
Conclusion: Trump’s Bitcoin Policies in Question
As the global investment community continues to express confidence in the US economy and the dollar’s strength, it is unlikely that Trump will adopt a Bitcoin strategic reserve to protect US dollar dominance. Ju’s insightful analysis highlights the potential for Trump to backtrack on pro-BTC policies.
In conclusion, while the world waits with bated breath for Trump’s Bitcoin policies, it is essential to consider the broader economic context and the perceived strength of the US economy and dollar. As Ju astutely pointed out, store-of-value assets like Gold and BTC tend to surge in price when investors perceive threats to US economic hegemony.
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