The Rise of Bitcoin in the Transformation of the Currency System

In recent years, the correlation between Bitcoin and gold prices has significantly increased, a phenomenon closely related to the arrival of the "post-pandemic" new era. In this context, Bitcoin is expected to truly participate in the significant changes in the international monetary system. This round of changes in the international monetary system will unprecedentedly accelerate the "gold" attributes of Bitcoin, allowing its reserve currency value to enter the mainstream view more quickly.

Looking back at the history of currency and the evolution of the international monetary system, precious metals, especially gold, have become the forerunners of human consensus—money—due to their scarcity, divisibility, and ease of storage. In the early 19th century, Britain established the gold standard. After the two World Wars, the Bretton Woods system was established, further standardizing and institutionalizing the gold standard. However, this system faced the "Triffin dilemma," which means that while the dollar was pegged to gold, it was difficult to meet the demand for world currency. In 1976, the Bretton Woods system collapsed and the Jamaica system was established, decoupling the dollar from gold and allowing it to become the world reserve currency due to its hegemonic position.

While the dominance of the US dollar has promoted international trade and global economic development, it also has inherent dilemmas. The strength of the United States cannot remain strong forever, and the practice of the dollar hegemony collecting seigniorage from the world has led to an expanding trade deficit and fiscal deficit. This issue became more pronounced during the pandemic, with government debt expanding unchecked. In addition, geopolitical issues are increasingly prominent, and the expulsion of a certain country from the SWIFT system is an important turning point in the trend of significant diversification in the currency realm.

Although the international monetary status of the US dollar is difficult to replace in the short term, the trend of change has already become apparent. "De-dollarization" has become a consensus, and events such as the COVID-19 pandemic and geopolitical conflicts are accelerating this process. In the future, the "de-dollarization" process may accelerate in the context of industrial chain fragmentation and geopolitical changes.

As the dollar's hegemony gradually dissolves and global trade continues to develop, the most likely formation is a diversified reserve currency system dominated by the US dollar, euro, and renminbi, supplemented by the British pound, Japanese yen, and Special Drawing Rights ( SDR ). There are also views that in the future, an "external currency" system supported by gold and other commodities may emerge, emphasizing that the commodity value of real resources (especially energy) will become the support for future currencies.

In this context, the financial market presents two trending trading directions: first, gold is breaking away from the traditional real interest rate pricing logic, with prices continually rising; second, Bitcoin is deviating from the traditional risk asset pricing logic, showing strong performance. These two assets may play an increasingly important role in the future transformation of the monetary system.