empty
21.03.2022 02:28 PM
Diversification of government reserves will replace USD: what does this mean for Bitcoin?

Over the past ten years, there has been a clear sense in the global economy that the U.S. dollar is a key component of the national reserve system. As of early March, more than 70% of government reserves are held in U.S. dollars. However, the sanctions pressure on Russia has shown that the approach to the formation of reserve systems by states is outdated and will be revised.

The main reason that the U.S. dollar will cease to be quoted as the main reserve currency is the sanctions due to the military invasion of Ukraine. Namely, the freezing of Russia's dollar reserve funds. Until recently, U.S. government bonds and USD had a reputation for being risk-free. But the asset freeze showed that under certain circumstances, however exceptional, a country could lose its reserves. Despite the effectiveness of the sanctions, the U.S. has pushed the global economy to look for alternatives.

This image is no longer relevant

Galaxy Digital CEO Mike Novogratz believes that after the end of all geopolitical frictions, the authorities will begin to adhere to the classic investment rule of portfolio diversification. Thus, the state's reserves will be protected from permanent freezing. The entrepreneur believes that, in addition to USD and gold, cryptocurrencies can become an important part of government reserves.

Bitcoin will take on the burden of leadership here as well, as it has important properties – risk hedging and high profitability. Together with other financial instruments, the main disadvantage of BTC - volatility - will be leveled. And given the process of state regulation of the industry that has begun, Bitcoin will become more widespread among large institutional players.

Thus, we can state the fact that the terrible events on the territory of Ukraine led to macroeconomic changes that the world will carry out for another year. And cryptocurrencies are destined to take one of the key roles in this process. First of all, Bitcoin, which, in addition to its obvious advantages, is a decentralized financial instrument. This suggests that this asset may be limited in terms of sanctions, but can never be completely cut off from interaction with other elements of the economy. The Russian authorities failed to take advantage of this window, but in the future, the prospects for cryptocurrencies as a reserve capital with increased resistance to sanctions and restrictions are limitless.

This image is no longer relevant

As for the direct display of the new status of Bitcoin on its quotes, we should not expect a bullish rally in 2022. The world is changing in the broadest sense of the word, and the Fed has just begun to tighten monetary policy. Ultimately, this will lead to the inability of Bitcoin to show aggressive growth within existing and future liquidity restrictions. But as interest in scarce assets grows and inflation rises in parallel, Bitcoin will become an increasingly important financial instrument.

This image is no longer relevant

Under the current conditions, the asset will continue to drift along the $32k-$45k range without any prerequisites for a possible exit from this area. Investors buy Bitcoin, but for long-term storage, not permanent activity. The "triangle" on the BTC/USD daily timeframe is close to its end, but taking into account the positions of the bulls at $32k and the bears at $45k, Bitcoin will not be able to make an aggressive breakout. MACD and RSI deliberately demonstrate the flat dynamics of the cryptocurrency price movement in the near future due to aggravated access to liquidity and low trading activity.

This image is no longer relevant

Artem Petrenko,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Pressure Returns to Bitcoin and Ethereum

Following Trump's speech at the crypto summit yesterday, pressure on Bitcoin and Ethereum has returned. Another factor contributing to this was a renewed sell-off in risk assets on the U.S

Jakub Novak 10:22 2025-03-21 UTC+2

Trading Recommendations for the Cryptocurrency Market on March 21

Bitcoin and Ethereum once again struggled to overcome key resistance levels, preventing a short-term upward trend in these assets. Their inability to even hold near weekly highs also points

Miroslaw Bawulski 08:16 2025-03-21 UTC+2

Technical Analysis of Intraday Price Movement of Bitcoin Cryptocurrency, Friday March 21, 2025.

With the appearance of Divergence between Bitcoin price movements with the Stochastic Oscillator indicator and the Bullish 123 pattern followed by the Bullish Ross Hook (RH)), in the near future

Arief Makmur 06:18 2025-03-21 UTC+2

Technical Analysis of Intraday Price Movement of Ripple Cryptocurrency, Friday March 21, 2025.

If we look at the 4-hour chart of the Ripple cryptocurrency, there appears to be a Divergence between the Ripple price movement and the Stochastic Oscillator indicator and the appearance

Arief Makmur 06:18 2025-03-21 UTC+2

Bitcoin aims to hit $90,000

Following yesterday's Federal Reserve meeting, where the central bank ran out of strong arguments to keep interest rates high, Bitcoin and Ethereum have resumed their bullish movement. Despite the Fed's

Jakub Novak 09:32 2025-03-20 UTC+2

Trading Recommendations for the Cryptocurrency Market on March 20

Bitcoin and Ethereum have experienced a rebound following yesterday's Federal Reserve meeting, which indicated that interest rates may need to be lowered. Regardless of how long the Fed intends

Miroslaw Bawulski 08:22 2025-03-20 UTC+2

Bitcoin Targets $85,000

Interest in Bitcoin remains strong, as any normal downward movement is quickly bought up by large players. The fact that U.S. spot Bitcoin ETFs have resumed recording net inflows also

Jakub Novak 10:49 2025-03-19 UTC+2

Trading Recommendations for the Cryptocurrency Market on March 19

Bitcoin and Ethereum faced challenges again after a recent sell-off on the U.S. stock market, but buyers and major players once again showed their strength, purchasing all downward movements

Miroslaw Bawulski 09:01 2025-03-19 UTC+2

BTC/USD Analysis – March 18th: Bitcoin Prepares for Growth, but the Risk of Collapse Remains

The 4-hour wave structure for BTC/USD appears clear and well-defined. After completing a five-wave bullish trend, a bearish phase began, which currently resembles a corrective pattern. Based on this

Chin Zhao 09:47 2025-03-18 UTC+2

Trading Recommendations for the Cryptocurrency Market on March 18

Bitcoin and Ethereum buyers attempted to achieve more significant growth, and for a moment, the bullish market might gain hope for a return. However, they could not hold the achieved

Miroslaw Bawulski 08:00 2025-03-18 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.