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Central banks flood the market – will Bitcoin become the new global reserve currency?

  • Due to the collapsing global economy, central banks worldwide are pumping billions of dollars into the market.
  • So far, Bitcoin is not moving in isolation from the stock market, so BTC has yet to prove itself as digital gold.

The Federal Reserve (Central Bank of America) has announced that it will provide more than USD 700 billion to stimulate the market. These measures are necessary as the global financial market continues to suffer greatly from the consequences and panic of the spreading coronavirus. Co-Founder & Partner at Morgan Creek Digital, Andreas Pompliano, describes on Twitter that the FED will buy up short-term loans from companies and banks.

Bitcoin, on the other hand, has a limited amount of money, so that in contrast to the classic monetary system, it is not possible to print an unlimited amount of money and thus contribute to a constantly rising inflation. The value of the dollar has fallen by more than 90% since 1913 until today. However, the wages of the working population have not increased to the same extent, so that fiat money is worth less and less, despite rising taxes and contributions to the state.

Not only the FED, but also other central banks and the International Monetary Fund are currently printing or lending billions of dollars to countries around the world. Within the last 24 hours America has pumped 700 billion USD into the market, China 100 billion USD, England also 100 billion USD and other countries will follow. Twitter user Vis aptly sums up that while the economy is receiving billions of dollars, the average citizen will not see a cent of it:

The central banks pump new money into the market whenever the economy is about to come to a standstill or a strong downward trend. The cheap money is then used to keep many companies alive that would otherwise have already gone bankrupt without cheap credit.

Bitcoin the new world leading currency?

Central banks around the world have joined forces to discuss the development of a central bank-based digital currency (CBDC). According to a new survey, 80% of the 66 central banks surveyed worldwide are working on the development of a CBDC, often in emerging markets. 40% have already moved on to an experimental stage.

The Central Bank of China is already testing the use of the digital yuan in cooperation with some of the country’s major companies. This will make China the first country in the world to make a CBDC accessible to a billion people. The immediate, medium and long-term effects of these steps cannot be estimated even by experts.

Currently, the dollar is still the world’s reserve currency and is considered a stable anchor by many countries and companies alike. Although Bitcoin has a number of decisive advantages over the USD, such as fast transaction times, decentralization and a limit, its distribution and acceptance is currently still far from fiat money.

It therefore remains to be seen whether a cryptocurrency can establish itself as a world leading currency. Follow us on Facebook and Twitter and don’t miss any hot news anymore! Do you like our price indices?

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About Author

Collin Brown

Collin is a Bitcoin investor of the early hour and a long-time trader in the crypto and forex market. He's fascinated by the complex possibilities of blockchain technology and tries to make matter accessible to everyone. His reports focus on developments about the technology for different cryptocurrencies.

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