A multi-polar world is bad news for the US but great news for bitcoin.
Since the 1950s, it’s been virtually impossible for a country to function without access to US dollars. And Washington maintained this highly-favorable status quo by putting various kinds of pressure on anyone who stepped out of line, from sanctions to election theft to outright invasion.
Not surprisingly, this weaponization of the world’s reserve currency has created resentment in many foreign capitals.
And after a long gestation period, that resentment is now erupting into a rebellion against dollar hegemony.
Let’s unveil the most significant events that have led to this point so far.
BRICS
Brazil, Russia, India, China, and South Africa (the BRICS) have been toying with the idea of forming a political/monetary counterweight to U.S. dominance since 2001. But there was more talk than action beyond some aggressive gold buying by Russia and China.
US sanction against Russia
Then the floodgates opened. Due to the heavy-handed sanctions imposed by US-led NATO during the Russia-Ukraine war, the BRICS alliance has suddenly become the hottest ticket in town. In just the past year, Argentina, Indonesia, Saudi Arabia, Iran, Mexico, Turkey, the United Arab Emirates (UAE), and Egypt have either applied to join or expressed an interest in doing so. And new bilateral trade deals that bypass the dollar are being discussed everywhere.
Combine the land mass, population, and natural resources of the BRICS countries with those of the potential new members, and the result is more or less half the world.
China as a peacemaker in the Middle East
And now things are getting real. China brokers a peace deal between Saudia Arabie and Iran, two bitter historical enemies who want to join the BRICS alliance but can’t if they’re in an undeclared war. Should they stop competing and start cooperating, they could dominate the Middle East and raise China’s clout in the region at the petrodollar’s expense.
For example, only two weeks after Saudi Arabia announced an effort to establish diplomatic ties to Iran in a deal mediated by China, more news surfaced that Saudi Arabia was also planning to reopen its embassy in Syria for the first time in over a decade. Rumors are swirling that Iran, Saudi Arabia and Syria are on the verge of geopolitical and economic agreements that sidestep the US.
Russia and India
Russia and India agree to trade oil for rupees. Russia is now India’s largest oil supplier, with 35% of that massive, growing country’s imports. The U.S. is not happy about this — but India doesn’t seem to care.
Brazil and Argentina
In February, the two dominant Latin American economies, Brazil and Argentina, announced plans for a common currency called the “sur” for use in bilateral trade. South America is a big, resource-rich place with numerous grudges against its intrusive northern neighbor. So a de-dollarization movement there, while not as immediately consequential as what’s happening in the Middle East or Asia, is both plausible and potentially serious for the dollar.
Lower Dollar, Higher bitcoin
Bitcoin has long been touted as a safe asset.
However, global financial markets only started to notice when a full-blown banking crisis began looming over the USBitcoin’s role in the global economy will continue to increase as more vulnerabilities in traditional markets are exposed. However, while its use in developing countries has already been proven, developed markets such as the US have yet to see its value.
The continued erosion of the dollar will push many retail and institutional investors toward bitcoin.
When inflation shows the way, all roads do indeed lead to bitcoin. The question is how long it will take for the market to reach the finish line.
