Skip to content

According to the former president of Morgan Stanley’s Asian division, Bitcoin will benefit from the dollar’s collapse

June 17, 2020

For the experienced economist Stephen Roach, former director of Morgan Stanley Asia, The dollar could collapse by up to 35 percent against foreign currencies such as the euro and the Chinese yuanBitcoin is fully benefiting from this decline.

In an article published in Bloomberg last Monday, the prominent economist argued that his forecast could shift into perspective in terms of the comparison between the United States and the currencies of a broad basket of trading partners of the North American nation.

For Roach, China and the eurozone make up 40% of US trade. and points out in this context that the significant appreciation of these two currencies – Chinese yuan and euro – would mean an immediate fall in the dollar.

According to the former president of Morgan Stanley’s Asian division, Bitcoin will benefit from the dollar’s collapseAccording to the former president of Morgan Stanley’s Asian division, Bitcoin will benefit from the dollar’s collapse

According to Stephen from the Yale School of Economics Cryptocurrencies like Bitcoin will benefit from the fall of the US dollar as the share of the American currency in the official currency reserves continues to fall sharply. with the increase in addition to savings and current account problems in the nation that are about to come into play.

For Roach, These factors will open the door for investors to move all of their dollar and dollar-backed investments to other ports, including Bitcoin.

The economist assures that daily sales of around $ 6.6 trillion in global currency markets are too large to be absorbed by traditional markets such as cryptocurrencies., also with the support of traditional gold, which further reinforces the negative outlook for the dollar.

“The broad renminbi index created by the Bank for International Settlements rose 53% from lows in December 2004,” said Roach, adding that China’s progressive economic and structural reforms will result in a stronger appreciation of The Mint.

Regarding the euro, the economist has indicated that the euro zone currency has exceeded expectations in the past ten years. despite its imperfection. The euro is currently 15 percent below its April 2018 high and is mainly in a safe buying area.

Roach in an interview last Monday, He pointed out that a massive budget deficit in the United States and deglobalization along with a low savings rate would be the perfect catalysts to lead to the fall of the dollar.

Bitcoin against dollars

Historically, the fall of the global stock market and the dollar has meant a significant increase in the price of Bitcoin. With the exception of very specific scenarios, such as March 12th on Black Thursday, the decentralized and scarce asset has far outperformed any asset it is compared to, including the dollar and traditional gold.

Although the opposite is not entirely clear, the index of the American currency rose by 8.76 percent in March of last year during the fall of Bitcoin.

After excessive financial support from many countries around the world to print fiat money to boost their economy, the prospect of unlimited liquidity helped all markets to recover.

Bitcoin was no exception, and in particular, it outperformed its traditional competitors by growing nearly 150 percent in June 2020. During the same period, the US dollar index fell from its previous high of 102.99 by 7.06 percent.

This clearly puts the reverse correlation between traditional value haven assets like the dollar and cryptocurrency Bitcoin in context.