This month’s huge sell off correlates with the value of US Dollar appreciating

in Project HOPE2 months ago

dollar-660223_640.png

Crowd sold off assets and acquired US Dollars

The huge sell off that occurred across all asset classes recently reveals definitely that everyone wanted cash in their hands by selling out stocks, gold, bonds ,BTC, and alt coins even at a loss. However, I got another fascinating insight, by watching Data Dash’s youtube channel video yesterday. Here Nicholus Mertin explains with data that people are provably flocking to put their funds in the US Dollar, as a safe haven.

You can watch this episode here -

People consider US Dollar as safe haven now

This sounded weird because gold fell hard, and that generally has a universal safe haven status. However, US Dollar is the World Reserve Currency, it’s strongest currency right now still.

usgold.png

See the gold has declined to US dollar, if I am reading this graph right.

useuro.png
Euro loses value against US Dollars , if I am reading this graph right.

What this means is that the US dollar has an upper hand as countries all over the world store US Dollars as their foreign exchange reserves.

room-1288438_640.jpg

Therefore, the US Dollar is the currency of the global economy, it is significantly used in international transactions and investments. US Dollar is also considered a safe haven currency.

Explanation on wikipedia on world reserve currency

“A reserve currency (or anchor currency) is a foreign currency that is held in significant quantities by central banks or other monetary authorities as part of their foreign exchange reserves. The reserve currency can be used in international transactions, international investments and all aspects of the global economy. It is often considered a hard currency or safe-haven currency.”
https://en.wikipedia.org/wiki/Reserve_currency

However, US dollar may lose it’s World Reserve Currency status

I found this really interesting. However, analysts are predicting that the US Dollar would cease to be a World Reserve Currency as it’s in the threat of losing this status. The reason for this mostly is that the US has a lot of fiscal deficit, too many debts that the country can’t pay back. The bond market there I think is giving negative yielding returns and very soon US banks may start giving negative interest rates to it’s depositors.

US Banks on the verge of giving it’s depositors negative interest rates!!

The latter is because of constant repo rate cuts, with banks encouraged to make loans cheap at the cost of cutting the interest yield of depositors. Currently US depositors I read are almost earning nill interest for the money they deposited in banks. When they start losing value of their deposit amount when negative interest rates kicks in, that maybe the time when the US dollars may lose it’s status of being a world reserve currency. It would be accompanied by repercussions world wide, as US dollar forms the foreign reserve portfolio for all countries of the world.

These days there are lending companies like Celcius, that give attractive interest on deposits of stable coins and crypto!! So there are alternatives to keeping money in banks for sure.

cn.png

PS - I tried posting on Hive, however, message keeps coming 'Missing Posting Authorithy'. So I posted in Steempeak as usually I do. Can someone tell me why I am not having posting authorithy in HIVE?. Have they rejected me, because I write badly or something?. I am not Justin Sun.

Also are we allowed to withdraw steem, 2 days back I could not do it, so asking!! I have been part of this platform since 2018 Oct, I deserve to be able to post at HIVE plus withdraw the Steem that's liquid!! Losing patience here, I have the right to withdraw my liquid steem, why on earth should it be so complicated!!

hive.png

Sort:  
 2 months ago 

Dear @mintymile

Interesting choice of topic.

Right now indeed everyone is panic selling all their assets to get their hands on cash. After all during credit crunch cash is the king.

And also it's important to notice, that during current coronavirus crisis many businesses and regular people will struggle with lack of income. And credits, loans, morgages, pensions, taxes - it all need to be paid.

It seem that FIAT currenty is not so worthless as we thought it is. After all value of FIAT = our debt. And there is more debt out there than FIAT currency altogether.

However, US dollar may lose it’s World Reserve Currency status

Is there any ofher currency which could replace it? I don't see any other FIAT being strong enough to do it. Russian or Chinese currencies are having very little trust. And they face similar problems with overblown debt. Euro is a joke. So which currency could become USD replacement?

Going into negative rates isn't also end of the world. EURO has been there for many years. So in long run it may be troublesome, but short term it shouldn't affect markets (Except of increasing more panic sell).

Have a great monday :)
Yours, Piotr

@crypto.piotr, you forget...that CHina is developing the digital currency, they already have tie ups commercialy through technology through ALi Baba associations, so digital yuan can become world currency.

Read this for more perspective -
https://magazine.cointelegraph.com/2020/03/16/china-digital-yuan-economic-cyberweapon-us-disarming/?_ga=2.200928042.522126518.1584451545-1313679894.1583415690

Fiat will die out soon, I am sure about that. My point in the article is not fiat currency but people buying US dollars and hoarding it taking it as safe haven asset. I can bet that fiat particularly the US dollar will fall due to negative interest rates, and that will have repercussions in global economy, people will hedge in GOLd, silver and maybe bitcoin.

It sounds great but it will be a big pain for all of us, allthough Bitcoin would rise if its takenn as safe haven.

I am sure its the END OF THE FIAT currency that's Govt. issued. Wait and see!!!

Resteemed already :) Upvote on the way

 2 months ago 

@tipu curate

I think what really matters most for now is to buy more Bitcoins and invest since the rate is still cheaper and low, who knows what may happen in the future.

Thanks for sharing this great post with love from @hardaeborla ❤️💕❤️