- June 11, 2024
- Posted by: [email protected]
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The recent end of the US-Saudi petrodollar deal ushers in a moment that might drastically impact Bitcoin’s financial trajectory. This development disrupts a decades-long economic standard and opens the door for increased global currency diversification, potentially benefiting digital assets like Bitcoin.
Since its inception in 1972, the US-Saudi petrodollar deal has anchored the US dollar as the primary currency for global oil trade. The end of this agreement on June 9, 2024, allows Saudi Arabia and other oil-producing nations to diversify their trading options. Countries are now exploring alternatives to the US dollar, including major currencies like the Chinese RMB, Euros, Yen, and Yuan, and digital currencies such as Bitcoin.This shift from the US dollar could accelerate the adoption of other currencies and digital assets. Saudi Arabia’s involvement in the China-led central bank digital currency (CBDC) project, mBridge, exemplifies this trend. This project, which includes central banks from China, Hong Kong, Thailand, and the UAE, aims to facilitate cross-border transactions using CBDCs. It is also compatible with the Ethereum Virtual Machine, suggesting a broader integration of digital currencies into mainstream finance.
The transition away from the petrodollar could lead to increased US dollar printing as the United States attempts to counterbalance the loss of its global oil trade monopoly. This scenario could result in heightened inflation, reducing the value of fiat currencies, and making assets like Bitcoin more appealing. Bitcoin’s fixed supply and decentralized nature position it as a viable alternative during periods of economic uncertainty.
As traditional fiat currencies potentially devalue due to inflation, Bitcoin could see increased adoption as a hedge against inflation. The anticipated rise in inflation might drive investors towards alternative assets like Bitcoin, enhancing its value. Despite concerns that the average person may not invest in Bitcoin during inflation spikes, market dynamics could still favor a long-term increase in Bitcoin’s value.
The potential benefits for Bitcoin from the end of the petrodollar agreement are multifaceted. Firstly, as a hedge against inflation, Bitcoin offers a fixed supply that protects against currency devaluation. Investors might increasingly view Bitcoin as a safe haven, driving up its demand and price. Secondly, the investment shift caused by anticipated inflation could see more capital flowing into Bitcoin and other digital assets. This shift could enhance Bitcoin’s value as traditional investments become less attractive in an inflationary environment.
Thirdly, the long-term appreciation of Bitcoin remains a possibility. Despite concerns that everyday investors might not turn to Bitcoin during inflation spikes, institutional investors and those with a deep understanding of digital assets might drive its value higher.
The fundamental properties of Bitcoin—decentralization, limited supply, and increasing acceptance—support its potential for long-term growth. Current market data reflects these dynamics. Bitcoin (BTC) is trading at $71,000, up 0.48% on the four-hour chart, although it has experienced a minor dip of 0.06%.
The pivot point stands at $69,100, providing a crucial baseline for traders. Closing prices above this level support bullish Bitcoin price predictions, with immediate resistance at $70,100, followed by $71,100 and $71,900. On the downside, support levels are identified at $68,400, $67,600, and $66,600.
Technical indicators, such as the Relative Strength Index (RSI), currently neutral at 47, suggest no strong momentum in either direction. The 50-day Exponential Moving Average (EMA) aligns closely with the current price at $69,600. These technical setups indicate that Bitcoin remains bullish above $69,100, but breaking below this threshold could lead to significant sell-offs.
The end of the US-Saudi petrodollar deal marks the beginning of a more diversified and digital global economy. Bitcoin is poised to benefit from these foundational shifts, potentially ushering in a bullish phase as it becomes an even more critical component of global financial portfolios. The evolving financial landscape, characterized by increased inflation and currency diversification, creates a favorable environment for Bitcoin’s growth and adoption.
