Commodities surging, global financial disarray, fiat turmoil, and a new cold war could lead to the global monetary system changing forever. This insane chain of events has led to the perfect environment for the move toward Hyper-Bitcoinization.
According to Zoltan Pozsar, Credit Suisse’s global head of short-term interest strategy, the crisis-level squeeze might eventually help Bitcoin if the present market chaos passes.
“We are witnessing the birth of Bretton Woods III – a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West,” Pozsar wrote.”
Pozsar said that the turbulence, which is being fueled in part by the Western sanctions on Russia, is increasing the “allure” of alternative kinds of money.
“Bretton Woods II was built on inside money, and its foundations crumbled a week ago when the G7 seized Russia’s FX reserves,” Pozsar added.
Even if recent price action has left some to doubt that Bitcoin is a safe haven, it is still doing better than most other digital assets. Bitcoin also pumped 8% last night following a leak from the Treasury Department regarding the Biden executive order.
Pozsar stated that in the long term, Bitcoin will likely fare better than most, because severe fines have made a more decentralized financial transaction system more desirable.
“This crisis is not like anything we have seen since President Nixon took the U.S. dollar off gold in 1971 – the end of the era of commodity-based money,” the economist said.
The End of the Unipolar World
In a research report, Marko Papic, chief strategist of alternative asset platform Clocktower Group, said that forecasts that the US dollar would lose its status as the world’s reserve currency as a result of Russian sanctions were “overstated.”
However, he predicted that a more polarized monetary system in global trade would “certainly include a multipolar FX reserve menu” implying that currency values would fluctuate.
Yet, according to Yahoo Finance, Jon Wolfenbarger, CEO and Founder of private investment analysis firm Bull and Bear Profits, “Bitcoin might theoretically profit from a weaker US dollar and a stronger commodities-backed Chinese yuan,” as investors seek other alternatives.
He claimed that if sanctions on belligerent Russian banks result in a severe enough commodities supply shock, western investors may opt to shift their assets away from the safety of the dollar and toward an alternate store of value.
“Money will never be the same again,” Pozsar wrote, “and Bitcoin (if it still exists then) will probably benefit from all this.”
