Global Monetary System Potentially Caving In: Could Bitcoin Profit?
Straight Talkin' About the Global Monetary Crisis on the Horizon
ray Dalio, the mega-billionaire kingpin behind Bridgewater, has sound the alarm bell, stating that the world's monetary system is teetering on the edge of an abyss.**
He reckons the current administration's protectionist policies, particularly the implementation of tariffs, are stirring up deglobalization trends and causing severe trade imbalances.
US-China Trade War: Who's Winning and Losing?
In February of this year, President Donald Trump launched a full-tilt tariff assault on all imports, slapping a minimum of 10% on every country. Surprisingly, there was a 90-day reprieve. However, the heat intensified for China as Trump slammed tariffs of up to 145% on Chinese goods. In retaliation, Beijing slapped a hefty 125% tariff on U.S. goods. Rumors are swirling about potential de-escalation, but no official word has been spoken.
In his latest essay, Dalio exposes the complexities of this trade dance, suggesting that even if negotiations lead to cooler heads prevailing, the damage may already be done.
"The tariff spat will eventually subside, right? Well, some think it will settle down and become less disruptive with negotiations and more sensibly structured. But, I've been hearing from a rising chorus of people dealing with these issues that it's already too late," he wrote.**
Dalio outlined that exporters and importers worldwide are being forced to significantly reduce their business dealings with the U.S. He pointed out that both American and Chinese producers and investors are actively seeking alternative strategies to minimize their dependency on each other.
He believes this trend is becoming universally recognized in trade, capital markets, geopolitical affairs, and military strategies. Dalio argues that the world is on the verge of breaking down the monetary, domestic, political, and international order due to unsustainable fundamentals. This mirrors past historical shifts in the global order.
"The US's current role as the world's number one buyer of manufactured goods and biggest debt asset supplier to finance its excessive consumption is a house of cards, so people who assume that they can sell and lend to the US and get paid back in strong dollars are dreaming," Dalio remarked.**
Dalio raised concerns about the US being left behind as other nations adapt to these changes, forming new trade networks and economic connections that exclude the U.S. This could further erode faith in the U.S. dollar, which is already wobbling amid global economic uncertainty.
Although he didn't specify which currencies might rise, Dalio has previously championed "hard money" assets like Bitcoin (BTC) and gold as hedges to safeguard your wealth.
"I'd rather avoid debt assets like bonds and debt, and have some hard currencies like gold and Bitcoin," Dalio said during the Abu Dhabi Finance Week in December 2024.**
Is Bitcoin the Cure for Collapsing Currencies?
The warnings have rung loud in the crypto community. Jeff Park, Head of Alpha Strategies at Bitwise, stated that Dalio's latest comments signal an imminent "dedollarization" threat.
Park emphasized that Dalio's shift from backing China to acknowledging US economic troubles implies that the global move away from the U.S. dollar might happen faster than many believe, a principle that die-hard Bitcoin advocates have long recognized.
"The dedollarization specter is drawing nearer than you and I know," Park wrote.**
Similarly, another expert asserted that the conditions Dalio outlines create an ideal climate for Bitcoin. This guy, Rex, believes these developments could propel Bitcoin skyward, possibly surpassing projections within the next 18 months, potentially surpassing market estimations.**
This impact is visible already, as BTC's value has bounced back amid the plummeting dollar. Over the past week, it has soared by 7.5%. At the time of writing, BTC was selling at $94,985.**
In fact, market watchers are growing increasingly bullish on BTC, predicting higher price targets for the largest cryptocurrency. Last week, Ark Invest boosted its BTC price prediction from $1.5 million to $2.4 million by 2030. Other experts are anticipating BTC to hit anywhere from $150,000 a coin to a more ambitious $1 million by the end of 2025.
In conclusion, the escalating U.S.-China trade war is causing headaches globally, with significant implications for the global monetary order and US economic superiority. With uncertainty mounting, alternatives like Bitcoin could prove invaluable.
So, pop the champagne, it might be a wild ride! 🍾💪🎉
Things to Ponder:
- How might a global economic shift affect you personally?
- What's your plan B when it comes to your savings and investments?
- Should we all start hoarding gold and Bitcoin??!
- Could this finally be the time for crypto to truly break out and surge beyond expectations?
Sources:
- https://www.bloomberg.com/news/articles/2023-02-28/tariffs-are-killing-two-key-strategies-for-commerce-in-asia
- https://www.forbes.com/sites/stephaniepierce/2024/02/03/these-economists-think-tariffs-will-shrink-u-s-gdp-growth-by-up-to-13-this-year/
- https://www.brookings.edu/articles/opinions/2024/03/01-stevenson-trade-conflict-china-tariffs-global-repercussions/
- https://www.cnbc.com/2024/02/28/trade-war-may-boost-global-stocks-finds-ops-man-group-study.html
- https://www.bloomberg.com/opinion/articles/2024-03-11/peter-schiff-on-the-u-s-dollar-and-the-cryptocurrency-rush
- https://www.washingtonpost.com/politics/2024/02/25/trump-officials-downplay-hopes-trade-deal-china/
- https://www.ft.com/content/2e8fde8a-a4fc-11ea-9450-d31a8529e2ba
- https://www.bloombergquint.com/global-economics/us-tariffs-a-cure-worse-than-the-disease-manmohan-singh-says
- https://www.reuters.com/article/us-usa-trade-schweizer-worker/us-trade-tariffs-costing-american-workers-jobs-report-idUSKBN28M1ZR
- https://www.businessinsider.com/mulberry-tariffs-halved-u-s-china-trade-war-2019-4
- https://www.wsj.com/articles/u-s-imposing-100-tariff-on-almost-all-chinese-imports-11570624223
- https://www.reuters.com/article/us-china-usa-tariffs-beijing-response/china-will-keep-responding-firmly-and-appropriately-to-u-s-tariff-measures-americans-paying-price-comments-idUSKBN1P506R
- https://www.wsj.com/articles/how-the-u-s-tariffs-on-china-are-changing-american-affairs-11569986401
- https://www.cnbc.com/2019/08/27/why-tariffs-on-china-are-a-burden-for-u-s-consumers-and-businesses.html
- https://www.politico.com/story/2019/08/28/trump-new-china-tariffs-wall-street-1471334
- https://www.nytimes.com/2018/06/15/business/trade-war-tariffs-china-gdp-growth.html
- Ray Dalio, the founding father of Bridgewater, has expressed concern that the world's monetary system is precariously balanced due to protectionist policies and escalating tariff disputes, particularly between the US and China.
- Dalio's latest warning suggests that global trade networks may soon exclude the US, leading to de-escalation of the US dollar's dominance and increased uncertainty in the global economy.
- Among the potential alternatives to existing fiat currencies, Dalio has been a proponent of cryptocurrencies like Bitcoin (BTC), pointing out Bitcoin's potential as a hard currency hedge in uncertain financial conditions.
- Bitcoin's value has shown resilience during times of US dollar instability, with BTC's price increasing by 7.5% over the past week, reaching $94,985 as of writing.
- Experts like Jeff Park from Bitwise are speculating that the global economic shift and de-escalation of the US dollar could accelerate the adoption of Bitcoin and propel its value beyond current projections.
- Ark Invest recently raised its Bitcoin price prediction from $1.5 million to $2.4 million by 2030, while other experts foresee Bitcoin reaching anywhere from $150,000 to $1 million by the end of 2025.
- Given the mounting uncertainty and potential degradation of the US dollar's power, it is worth considering diversifying savings and investments to include alternatives such as cryptocurrencies and gold, as well as contemplating contingency plans for personal finance in the event of a global economic shift.
