U.S. Dollar ‘Paradigm Shift’—Wall Street Giant Issues Shock $10 Trillion Warning After Bitcoin ETF Boom Sparked An Ethereum, XRP And Crypto Price Rally

27 Jan 2024 by Billy Bambrough · Forbes

Bitcoin has rocketed higher in recent months, pulling up the price of ethereum, XRP and the wider crypto market (despite surprise fears "AI agents" are coming for crypto).

The bitcoin price has doubled over the last year, bouncing back from a huge price crash in 2022, in large part thanks to hype around a fleet of spot bitcoin exchange-traded funds (ETFs)—with JPMorgan issuing a surprise bitcoin ETF prediction this week.

Now, after former U.S. president Donald Trump effectively killed off any chance of the Federal Reserve issuing a so-called digital dollar, a Wall Street giant has predicted a bitcoin ETF "paradigm shift" could be about to hit U.S. dollar’s global dominance.

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Bitcoin—along with rival coins ethereum and XRP as well as dollar-pegged stablecoins—have triggered ... [+] a potential "paradigm shift" that could threaten the U.S. dollar’s global dominance.getty

"The adoption of bitcoin beyond speculative purposes continues to evolve," Morgan Stanley's head of digital assets Andrew Peel wrote in a report, pointing to the raft of spot bitcoin ETFs that were green lit by the U.S. Securities and Exchange Commission (SEC) earlier this month, calling the approval "a potential paradigm shift in the global perception and use of digital assets."

Wall Street giants BlackRock and Fidelity have led the spot bitcoin ETF charge, with BlackRock's legendary chief executive revealing his next step in a plan to "revolutionize" the financial system.

"The U.S. dollar’s dominance as the cornerstone of the international financial system is now being reconsidered in the face of evolving geopolitical shifts and the growing U.S. twin deficits," Peel wrote, referring to the fiscal and current account deficits, and adding: "A clear shift towards reducing dollar-dependency is evident, simultaneously fueling interest in digital currencies such as bitcoin, stablecoins, and central bank digital currencies (CBDCs)."

Governments around the world, led by China and its digital yuan, have been exploring the creation of so-called CBDCs since Facebook's 2019 bitcoin-inspired, failed digital currency project sparked fears private, digital currencies could threaten the supremacy of central banks.

Stablecoins, such as Tether's USDT which are usually pegged to the U.S. dollar, have meanwhile seen their trading volume surge in recent years, while Elon Musk's X social media platform is quietly plotting to "revolutionize" payments this year.

"The global adoption of dollar-linked stablecoins has seen exponential growth," Peel wrote. "In 2022, they processed transactions close to $10 trillion on public blockchains, rivaling traditional payment giants like PayPal and even Visa. This has prompted major financial service companies to adapt."

The bitcoin price has surged over the last year, making up much of the ground it lost in a 2022 ... [+] bitcoin price crash, thanks to hype around a spot bitcoin ETF.Forbes Digital Assets

Fears over the future of the U.S. dollar dominance have also emerged due to the huge level of Covid-era government money printing, partly triggering an inflation crisis.

Last year, Jefferies' analysts warned the Fed will this year be forced to restart its money printer—potentially collapsing the U.S. dollar and fueling a bitcoin price boom to rival gold.