Bloomberg strategist for the 50th anniversary of the Bretton Woods system said that Bitcoin will replace gold

Bitcoin (BitcoinOn August 16, Mike McGlone of Bloomberg Information stated that although US regulators are trying to prevent the rise of gold, it is replacing gold.

The senior commodity market strategist attributed the outstanding growth of the Bitcoin market relative to gold to the “digitalization of currency and finance”, and pointed out that the same factors helped the U.S. dollar “quickly and organically” gain its dominance over precious metals.

Since August 2011, spot gold has fallen more than 99% against Bitcoin. Source:

McGron’s comments appear to be excerpts from a recent three-day conference held at the Bretton Woods Hotel in New Hampshire, attended by economists, macro analysts, and investors, including Fidelity Investments’ Jurrien Timmer and Morgan Stanley. Danley’s Amy Oldenburg et al.

The Bretton Woods system is very popular among economists because it presided over United Nations Monetary and Financial Conference In 1944, this resulted in the obligation of the United States, Canada, Western European countries, Australia, and Japan to peg their currencies to gold.

As a result, the new monetary institution won the title of “Bretton Woods System.”

But on August 15, 1971, Richard Nixon, the 37th President of the United States, removed the U.S. dollar from the gold standard. Many economists welcomed this move and called on John Maynard Keynes’s benchmark view that the gold standard is “Savage ruins.”

The latest “Bretton Woods System: Realignment” conference is a metaphorical tribute to the end of the Bretton Woods system, while focusing on emerging financial assets such as Bitcoin, which may replace the “dollar hegemony” as the next global reserve asset.

In doing so, Bitcoin directly challenged the status of gold as a traditional competitor to the US dollar, and as McGonlong said, this situation has already happened.

Five years of dollar dominance

Harold James Proposed in his July 2021 article “Digital technology is driving a new monetary revolution, which may completely end the global dominance of the dollar”, suggesting that crypto assets such as Bitcoin and Ethereum can play a role in reshaping the global economy.

Although the U.S. dollar has the ability to survive the worst global economic conditions of the past five years and become the world’s reserve asset, these statements have emerged.

In detail, the so-called Nixon shock 1971 caused double-digit inflation in the United States, causing the U.S. dollar to fall more than 50% against the yen and the German mark. But in the race for global legal hegemony, neither of these two currencies can replace the U.S. dollar.

The performance of the yen against the dollar after the Bretton Woods Agreement.Source: Fred

The US dollar recovered strongly in the early 1980s. It had a similar upward trend in the second half of the 1990s-during the boom and bust of the Internet. The U.S. dollar also survived the 2008 financial crisis and the economic difficulties caused by Covid-19.

The dollar shocks the future?

But why did the dollar survive?Bloomberg Commentary columnist Neil Ferguson provides three reasons In its latest report.

First, the U.S. dollar has been supported by the Fed’s higher interest rate policy to reset expectations.

Oil is priced in BTC.Source: Econometrics

Second, driven by the prosperity of the Eurodollar and petrodollar markets, the liberalization of the capital market has increased the international utility of the U.S. dollar, prompting foreign central banks to use it to execute international transactions.

Third, the U.S. government’s Power to impose financial sanctions For countries that it believes to be unruly with the White House policy—especially after the attacks on the World Trade Center on September 11, 2001—make the U.S. dollar a financial weapon.

But James pointed out that after the Covid-19 crisis, the U.S. dollar encountered unprecedented economic conditions.Witnessed in the past 18 months The U.S. deficit climbs to 13.4% of GDP (GDP) is the second largest number since the end of World War II.

U.S. public debt in the past five years.Source: Fred

After the Senate has just passed a $1 trillion infrastructure bill, it is expected to be even higher.The Congressional Budget Office reports that the stimulus plan will Expand the budget deficit by another 256 billion U.S. dollars In the next ten years.

at the same time, Another package worth 3.5 trillion dollars The bill focuses on anti-poverty and climate issues and is expected to be promulgated by the end of this year. Therefore, James pointed out that the rising deficit has reduced the dollar’s upward prospects in the global market. He wrote:

“There are already some dangers in the U.S. Treasury market, with tight liquidity (2020) and weakening foreign demand […] Therefore, the new currency may end the long-term dollar hegemony. “

Bitcoin and gold compete for U.S. dollar alternatives

The Fed’s loose monetary policy has led to a supersonic rise in bitcoin market prices, so that the strong upward trend has defeated the traditional hedge asset gold.

As the US deficit increased, Bitcoin rose from $3,858 to $64,899. Source:

Anthony Pompliano, a partner of Pomp Investments, is a long-time Bitcoin advocate. Said in the notes Tell customers that if they hold wealth in dollars, bonds or gold, their investment will produce a “negative real rate of return.”

“You basically only have Bitcoin or stocks left. Considering that high volatility may outperform stocks for a long enough time, this leads you to consider allocating to Bitcoin.”

As Magron pointed out in a tweet on Monday, despite the potential regulatory challenges facing emerging digital assets, Pompliano’s statement has emerged.The crypto industry faces challenges from Treasury Secretary Janet Yellen, Democratic Senator Elizabeth Warren and Gary Gensler, Chairman of the Securities and Exchange Commission.

related: What the SEC can learn from German regulators

But McGraw pointed out that hard regulations will not be able to disrupt the rise of Bitcoin against gold. In addition, Liam Bussell, head of corporate communications at Banxa, an encrypted trading service, pointed out that US regulators do not want to block Bitcoin; they want to protect US investors from fraud.

“In 2020 alone, illegal schemes led to approximately 82,135 cryptocurrency fraud cases,” Bussell said, adding:

“It is conceivable that the U.S. regulatory agencies involved in digital assets (CFTC, SEC, and FINRA) are open to the diversification of tools, as long as these tools are fair and operate in a transparent manner.”

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