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FameEX Hot Topics | Analyst's Warning: Potential Collapse of the US Dollar Could Favor Bitcoin Holders

2023-10-10 16:54:16

Global financial services firm Jefferies has issued a warning regarding the potential collapse of the U.S. dollar, a scenario that could prove beneficial for individuals holding gold and bitcoin. Jefferies, a prominent global investment bank and capital markets firm headquartered in the United States, operates across various regions, including the Americas, Europe, the Middle East, and Asia Pacific.

In a recent investor note, Chris Wood, Global Head of Equity Strategy at Jefferies, emphasized the significance of bitcoin and gold as essential safeguards against currency devaluation and the diminishing returns resulting from inflation. Wood, a distinguished figure in the financial industry who received recognition as the Best Strategist in the Asia region by Asiamoney in 2020, believes that the current actions of the Federal Reserve warrant concern.

Wood pointed out that the Federal Reserve has been both reducing its balance sheet and rapidly increasing interest rates in an attempt to combat surging inflation. However, he expressed apprehension that the Fed may be compelled to abruptly shift to a more dovish stance due to the looming threat of a U.S. recession, driven by the spiraling $33 trillion U.S. debt.

The Jefferies analyst cautioned that G7 central banks, with a particular focus on the Federal Reserve, might find it challenging to smoothly exit from unconventional monetary policies. Consequently, they may remain committed to expanding their central bank balance sheets through various means. In such a scenario, Wood stressed that the consequence could be the collapse of the U.S. dollar's paper standard, a development that would favor both gold bullion and bitcoin owners.

Wood advised investors to view their holdings of gold and bitcoin as a form of insurance rather than short-term speculative trades. Furthermore, he recommended that long-term global investors, including pension funds, allocate 10% of their portfolios to bitcoin, recognizing the cryptocurrency as an increasingly investable asset for institutions. He noted that the existence of custodian arrangements for digital assets has made bitcoin a viable alternative store of value alongside gold.

In summary, Jefferies' Chris Wood has raised concerns about the U.S. dollar's future stability, suggesting that central banks, including the Federal Reserve, may struggle to exit their unconventional monetary policies. In light of this, he has highlighted the potential advantages for those holding gold and bitcoin, advocating for a long-term investment approach and institutional allocation to bitcoin as a store of value.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.

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