FameEX Hot Topics | Trump: Bitcoin Eases Pressure on the US Dollar

During a recent press conference at the White House, U.S. President Donald Trump commended Bitcoin for its potential to positively impact the U.S. economy, particularly its role in alleviating pressure on the U.S. dollar. Trump expressed his strong support for the cryptocurrency industry, which he believes has grown into a sector of substantial global importance, especially due to its relevance in geostrategic competition. He noted, "It has become amazing. I mean, it is the jobs that it produces, and I notice more and more you pay in Bitcoin. People are saying it takes a lot of pressure off the dollar, and it is a great thing for our country."

Trump's remarks seemed to indirectly reference the Triffin Dilemma, a well-known economic theory that addresses the inherent conflict between the U.S. dollar's role as the global reserve currency and the long-term stability of the dollar. Digital asset researcher Anders X explained that this dilemma arises from the U.S.'s need to run trade deficits to satisfy the global demand for dollars. Foreign countries use the dollar for trade settlements and as a store of value, often to shield their own currencies from inflation. This creates an ongoing cycle of trade deficits, which are financed by the creation of more dollars, thereby eroding the dollar's value over time.

As the issuer of the world’s reserve currency, the U.S. is in a unique position that requires balancing short-term liquidity needs with the long-term preservation of currency stability. Critics argue that the inflationary pressures on the U.S. dollar, driven by persistent trade deficits and debt, pose significant risks to the country's economic future. Bitcoin, with its fixed supply, could offer a potential hedge against these inflationary trends. In the past, Trump has suggested using Bitcoin to address the growing U.S. national debt, which currently stands at over $37 trillion. However, many experts contend that even if the U.S. Treasury owned all of Bitcoin, it would not come close to covering this massive debt.

Despite Bitcoin's potential as an alternative to the dollar, analysts warn that the U.S. government’s ongoing trade deficits and mounting debt will continue to diminish the dollar’s value. Bitcoin advocate and macroeconomist Lyn Alden famously said, "nothing stops this train," referring to the inevitable trend of governments printing more money, thus devaluing national currencies. Alden’s statement reflects the difficulty in reversing the financial instability caused by excessive government debt.

The decline in the U.S. dollar’s strength was underscored by the recent drop in the dollar currency index (DXY) to its lowest point in three years. This weakening of the dollar is accompanied by rising U.S. government bond yields, signaling a loss of confidence among investors in the U.S. government's creditworthiness and the sustainability of its ever-growing debt. These developments have sparked concerns about the future stability of the dollar.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.