The petrodollar agreement between Saudi Arabia and the United States has reached its end, and Bitcoin and the entire cryptocurrency industry are expected to benefit from it, as the Gulf state has now opened the door to adopting various currencies for payments.
1. Introduction to the Shift in Global Finance :
The financial world is preparing for a seismic shift following Saudi Arabia’s decision not to renew its long-standing security agreement with the United States, which expired on June 9, 2024. This pivotal move allows Saudi Arabia to sell oil and other commodities in various currencies, including the Chinese yuan, the euro, and not exclusively the US dollar. Additionally, the use of digital currencies like Bitcoin may also be explored.
2. Departure from the Petrodollar System :
This development represents a significant departure from the petrodollar system established in 1972 when the United States decoupled its currency from gold. Furthermore, the decision is expected to accelerate the global trend away from the US dollar, with Bitcoin standing to benefit significantly from this change.
3. Saudi Arabia’s Participation in mBridge Project :
It is worth noting that Saudi Arabia has announced its participation in the cross-border Central Bank Digital Currency (CBDC) experiment, dominated by China, known as the mBridge project. This step reaffirms its commitment to diversifying its economic dependencies, as the Bank for International Settlements (BIS) announced Saudi Arabia’s full participation in the mBridge project. The project includes central banks from China, Hong Kong, Thailand, and the United Arab Emirates.
4. Significance of the mBridge Platform :
According to “Reuters,” Josh Lipsky from the Atlantic Council noted that “the most advanced cross-border CBDC project has added a major economy to the G20 and the largest oil exporter in the world.” The mBridge platform, which has now reached the “minimum viable product” stage, aims to facilitate cross-border transactions using national digital currencies. Additionally, the platform is compatible with the Ethereum Virtual Machine, which is the backbone of the digital currency network. This opens new horizons for digital currency transactions.
5.Bitcoin’s Potential Benefits from Economic Shifts:
How does Bitcoin benefit from this development? In a post on the (X) platform, Dr. Profit, a well-known cryptocurrency analyst, wrote that “the US-Saudi petrodollar agreement is ending and will not be extended. This will force the United States to print tons of new US dollars!” He continued: The expected increase in US dollar printing is anticipated to lead to rising inflation. As inflation rises, the value of fiat currencies like the US dollar tends to erode. Furthermore, this would drive investors to seek refuge in alternative assets.
6. Long-term Economic Prospects for Bitcoin :
He added: Here, it is essential to point out Bitcoin, with its fixed supply and decentralized nature, as a major beneficiary of this shift. Consequently, the analyst expects a bullish trend for Bitcoin, stating: “From this day forward, the dollar will face severe pressure, dollars will be printed, and inflation will begin to rise, which is a bullish signal for gold, Bitcoin, stocks, and real estate.” He indicated that the short-term economic disruption expected from this shift may be challenging, but the long-term prospects for Bitcoin are promising. Bitcoin’s role as a hedge against inflation has become clearer as traditional financial systems face instability. Moreover, the decentralized and deflationary features of Bitcoin make it an attractive store of value. Bitcoin also provides a hedge against the devaluation of fiat currencies. Dr. Profit also noted that the United States will soon realize that it cannot overcome inflation.
Source : ida2at.org
