The world’s economic powerhouses appear to be distancing themselves from US dollar hegemony as they look to create a new world order. The BRICS alliance, which is made up of Brazil, Russia, India, China, and South Africa, is reportedly working on creating its own currency, according to State Duma Deputy Chairman Alexander Babakov. The move is seen as a way for the BRICS nations to promote their shared objectives and distance themselves from US dollar hegemony.
Speaking at the St. Petersburg International Economic Forum event in New Delhi, India, Babakov stressed the importance of both nations working towards a new medium for payments. He added that digital payments could be the most promising and viable option. The new currency is expected to benefit China and other BRICS members, rather than the West.
Babakov went on to postulate that the new currency would be secured by gold and other commodities such as rare-earth elements. This move would further cement the new currency’s value and provide a more stable platform for transactions. The BRICS alliance is seen as a viable alternative to the US dollar hegemony, and the creation of a new currency could provide a way to challenge the current financial system.
This week, former Goldman Sachs chief economist Jim O’Neill called on the BRICS bloc to expand and challenge the dominance of the dollar. In a paper published in the Global Policy journal, he wrote that “the U.S. dollar plays a far too dominant role in global finance.” The BRICS nations appear to be taking this advice to heart and are exploring ways to distance themselves from the current system.
In a related development this week, China and Brazil reached a deal to trade in their own currencies. The move will remove the US dollar as the intermediary, further empowering both nations to distance themselves from the world’s reserve currency. The agreement will enable China and Brazil to conduct trade and financial transactions directly, without having to go through the greenback.
China is already leading the way in the development of its central bank digital currency project, and crypto adoption in Brazil is growing following the legalization of it as a payment method in the country late last year. This move further underscores the growing interest in creating alternative currencies to challenge the US dollar’s hegemony.
While the US continues its war on crypto, financial regulators are tightening the screws on the embryonic industry. This move is seen as a way to maintain the US dollar’s dominance and prevent the emergence of alternative currencies. However, the BRICS alliance and other emerging economies appear to be forging ahead with their plans to create a new financial order, one that is more equitable and better suited to their needs.
Randall Crater, the person responsible for operating the fraudulent scheme known as “My Big Coin,” was given a sentence of one hundred months in prison and was ordered to make restitution payments totaling more than seven and a half million dollars to those who had lost money as a result of his scheme.
According to a statement that was released by the United States Department of Justice on January 31, the United States District Court Judge Denise Casper in the state of Massachusetts was the one who handed down the sentence that was given to Crater.
This sentence was handed down to Crater after he was found guilty by a federal jury on July 21 of four counts of wire fraud, three counts of unauthorised monetary transactions, and one count of operating an unregistered money-transmitting corporation. All of these charges were related to the same scheme. After adding up all of these fees, it became clear that Crater was running an unlicensed money transmission business.
Crater launched My Big Coin in 2013, and despite the fact that it was never intended to be a payment mechanism for cryptocurrencies, the company promoted itself as such. This resulted in the solicitation of potential victims between the years of 2014 and 2017, and the con was carried out right up to 2017.
According to Crater, the digital currencies that are available for purchase on My Big Coin are fully operational tokens that are backed by gold. Furthermore, the website has a collaboration with Mastercard to facilitate transactions.
In addition, Crater provided its users with access to a marketplace known as “My Big Coin Exchange,” which was promoted as a location at which users could trade their cryptocurrencies for fiat currencies such as the United States dollar and other currencies.
A substantial percentage of the $7.6 million in finance that Crater and his marketing team were successful in generating was used for the acquisition of a residence, many automobiles, and more than one million dollars’ worth of antiques, artwork, and jewellery.
The current shift in the position of Bitcoin in relation to other digital assets has made it possible for the Bank of America Corp (BoA) to believe it is becoming a safe space in the blockchain industry yet again after experiencing a downfall over the past months.
BoA digital strategists Alkesh Shah and Andrew Moss observed that bitcoin and gold now have a 40-day correlation of about 0.50, up from a correlation of nearly zero in mid-August. Despite being higher, at 0.69 and 0.72 respectively, the correlations between the S&P 500 and the Nasdaq 100 have leveled out and are now below previous highs. They further hinted that this could be a good sign that bitcoin may soon accelerate.
The analysts further stated that “as economic uncertainty persists and a market bottom yet to be seen, investors may consider Bitcoin as a relatively safe haven due to a decelerating positive correlation with SPX/QQQ and a quickly rising correlation with XAU.”
More Solutions for Bitcoin
There were recent rumors of multiple takeover negotiations at Bitcoin Group. Several potential companies that are involved in deposit-taking or credit institutions from Germany were rumored to have indicated interest to take over the company.
Bitcoin Group is a blockchain venture capitalist firm that is based in Germany. The company’s main areas of interest include the acquisition, disposition, and management of investments in diverse businesses. Additionally, they acquire these businesses’ strategic management, control, and coordination.
Some stakeholders in the blockchain industries have highlighted measures to be taken, including these acquisitions, for bitcoin to become successful again.
Even though Bitcoin had a difficult third quarter, it still managed to beat traditional assets like gold, oil, and other commodities, with the exception of the US Dollar Index (DXY), which measures the value of the dollar relative to other major currencies according to a report from CoinGecko
Market analyst Ali Martinez stated that bitcoin should maintain a price above $19,200 to reduce selling pressure because this is a crucial milestone.
Robert Kiyosaki, the financial educationist, popularly known as Rich Dad, has come out openly to denounce real estate as an investment alternative, but now he has changed his mind.
Taking on Twitter over the weekend, Kiyosaki noted that he described, in his new book for 2022, dubbed the Capitalist Manifesto, how a Marxist is now governing the United States.
As described by Kiyosaki, under Marxist rulership, property taxes will be raised, rent controls will be imposed, and interest rates will also be hiked. According to him, all of these events will continue to impact the value of property taxes.
Coming from the COVID-19 pandemic period that was ushered in in the first quarter of 2020, the government has taken two distinctly different directions as it concerns the interest rates in the country. At first, the interest rate was lowered to zero as the government attempted to help cushion the economy adversely impacted by lockdowns and layoffs affecting businesses.
Afterwards, the government reversed course when it discovered the economy had somewhat recovered from the pangs of the COVID-19 pandemic. The government started raising interest rates this year, and by general statistics, the real estate industry has been seeing generally low listings as prices are not favourable to buyers.
Despite the current economic conditions affecting every asset class, Robert Kiyosaki revealed that he is recommending Bitcoin as a reliable investment asset. Unusually, the financial guru also noted that he is classifying Gold and Silver alongside the asset classes that can serve as a good hedge against current inflation.
It has been a rollercoaster for the United States Federal Reserve as its interest rate hikes, targeted to tame inflation, have not really helped, with the last inflation figure pegged at about 8.2% for September.
While the price of Bitcoin is not particularly encouraging considering its deviation from its All-Time High (ATH) value back in November last year, the coin is tapped as one backed with solid fundamentals that can drive its growth in both the mid-to-long-term.
Despite the current market pullback, MicroStrategy co-founder and chairman Michael Saylor remains bullish.
The crypto bull not only thinks that Bitcoin will regain its past glory but also sees the flagship cryptocurrency has a lot of potential to grow beyond its current trading level.
Saylor believes that Bitcoin is 100x better than gold and sees it as the next big ‘store of value asset’. The executive said that during the Money Festival hosted by MarketWatch on Wednesday, but the event was first reported on Saturday, September 24. “I think that the next logical stop for Bitcoin is to replace gold as a non-sovereign store of value asset, and gold is a $10 trillion asset as we speak. Bitcoin is digital gold, it’s 100x better than gold,” Saylor said.
During the festival’s Best New Ideas segment, Saylor did not hold back when he predicted the cryptocurrency’s price may reach $500,000 within the next decade. “You can’t inflate it. The half-life of money in Bitcoin is forever. You can move it on billions of computers at the speed of light. So, if Bitcoin goes to the value of gold, it’s going to $500,000 a coin, and I think that happens this decade,” the executive stated.
At the time of writing, Bitcoin was trading at $$18,876.55, down 0.55% in the last 24 hours, according to data from CoinMarketCap. Putting into consideration that Bitcoin is trading at this level now, $500,000 projected by Saylor implies that the cryptocurrency has a potential upside of over 2,500%.
Saylor is putting his money where his mouth is. He told MarketWatch that he personally owns 17,732 Bitcoins that he’s had for “about two years” when he bought them at around $9,500 per coin.
Bitcoin Is Separate from Cryptocurrency
Early this year, Fidelity Investment, a Boston-based investment management firm, issued a report that confirmed Saylor’s sentiments. In February, the investment manager acknowledged that although the world is flooded with cash and various cryptocurrencies, Bitcoin is special because it has the potential for significant price gains.
Fidelity said Bitcoin is a scarce “monetary good,” superior in many ways to other cryptocurrencies, gold, and even government-issued money like the dollar. The investment manager predicted Bitcoin to be a lot higher in the next five to 10 years.
In early August, Saylor stepped down as MicroStrategy CEO. He is now the executive chairman of the software firm, focusing solely on Bitcoin.
MicroStrategy, a publicly traded software company, is the single largest corporate holder of Bitcoin, with over 129,000 BTC on its balance sheet. Just one month after its popular CEO Michael Saylor stepped down, the company bought 301 Bitcoins for about $6 million, and now holds almost 130,000 Bitcoins in its coffers.
Zimbabwe’s Central Bank launched gold coins in July as part of efforts to help curb surging inflation amid a slump in the country’s currency. The move sparked interest in whether gold could serve as a safe haven investment during a market crisis.
Based on Zimbabwe’s development, Blockchain.News recently had a conversation with Collin Plume, the President and CEO of Noble Gold Investments, regarding whether gold could be a safe haven investment that investors should rely on during turmoil times.
The global pandemic raging for over two years has created unemployment, supply chain problems, and more that disrupted economic growth. With the rise of inflation, the US dollar has lost its value and purchasing power. But on the other hand, gold has increased its purchasing power because its value tends to rise with the price of goods.
In light of pandemic worries, rising debts, market downturns, business failures, and mounting inflation realities in regard to economic policies coming out of central banks and other regulators, investors have appeared to rush to invest in gold to secure their financial positions.
Meanwhile, several crypto companies are facing bankruptcy, while many tech firms (such as Klarna, ClickUp, Lacework, Bolt, PayPal, among others) recently announced massive layoffs of employees. But questions remain about how investors can protect themselves from the risks of the ongoing financial crisis.
In the current times of financial instability and turmoil, investors seek opportunities to protect their assets and values.
Inflation Hedge
Asked whether gold is a good investment, Plume said YES. While this can be demonstrated by Zimbabwe’s recent gold adoption, generally, gold is viewed as the ideal hedge against inflation. This is because fiat currency loses its purchasing power when things become more expensive, but gold tends to be priced in those currency units.
Plume explained: “Although the gold market can’t do anything about economic inflation on a macro level, it’s easily the best hedge against inflation for an individual’s investment portfolio”.
Nowadasy, gold’s uses and the demand for physical gold have increased. According to Plume, “Gold’s industrial uses are steadily growing (gold is used in electronics, cars, biotechnology, and even on Mars) while its global supply is quickly shrinking, so its value is guaranteed to go up over time.”
Geopolitical and Economic Instability
Gold also provides investors with a safe haven during economic and political instability. The precious metal has often taken the role of an inflation hedge and a portfolio stabilizer during turbulent financial markets.
The gold market rose above the $2,000 an ounce level in March for the first time since August 2020, in response to Russia’s invasion of Ukraine in late February. Geopolitical uncertainty has increased the attractiveness of the precious metal for investors seeking a safe haven for their funds.
Prices have since retreated, declining by around 6% year-to-date, and have struggled to regain ground above the $1,800 an ounce level where it started the year.
This year, gold is getting investors’ attention following Russia’s invasion of Ukraine. Sanctions against Russia have already taken the commodities market for a wild ride, fueling concerns of stagflation — a combination of high inflation and slow economic growth — both of which is positive for gold.
In July, Zimbabwe’s central bank started selling gold coins to the public to help protect people’s savings against the country’s runaway inflation and offer an alternative to the widely used US dollar.
Zimbabwe still remembers the country’s economic collapse under the late Robert Mugabe, who ruled for nearly four decades.
Hyperinflation forced the nation to abandon the Zimbabwe dollar in 2009, and it opted instead to use foreign currencies, mainly the US dollar. During the worst of the crisis, the government stopped publishing official inflation figures, but current statistics put the inflation rate at 89.7%.
Gold Tokenization
Despite physical assets like gold, silver, among others, having weathered countless financial storms throughout history, Gold might still need alternative trading platforms to help democratize access to gold using modern technology through tokenization.
Investment in physical gold has many advantages, but it has a few drawbacks. The main challenges that investors face in the investment of physical gold are issues associated with accessibility, storage, security and ability to resell on a regulated market.
While Gold is considered a safe bet, buying it is often a challenge for retail investors. For example, an average person will need to pay the costs associated with gold acquisition, trust an intermediary, and have a storage solution.
In recent years, the excitement surrounding cryptocurrency has been attracting precious metal buyers away from their traditional investments as they dipped their toes into the crypto pool. But with the recent digital asset market crash, that seems to be changing. Many investors are returning to gold to tame the prevailing financial winds in the crypto markets.
Yet, cryptocurrency like Bitcoin is in a tough year because of the recent market crash. Major Cryptocurrencies, including Bitcoin, and Ethereum, have plummeted, triggered by inflation and Fed’s interest rate hikes.
For the long term, blockchain technology is increasingly being used to address all these constraints in today’s internet era. Blockchain enables the tokenization of gold and other commodities. The technology allows users to invest in digital gold, therefore helping to resolve various issues tied to physical gold ownership.
Gold as Key Portfolio of Investment
Gold’s performance moves independently and has low correlation with other assets such as stocks, real estate, commodities, bonds. The precious metal may therefore help serve as a return diversifier within a broader multi-asset portfolio.
Therefore, based on the above analysis, gold is a good investment that investors can use to hedge and diversify their portfolios. However, according to Plume: “Some people believe gold is just for older investors, or they don’t understand the use for it. Many bullish investors focus on the hottest, newest assets, and while gold may not offer the same spikes in value as Tesla or crypto, it also doesn’t bring the same risk of loss as they do.”
Investors are advised to hold around 5-10% of their portfolio’s value in a form of gold, whether physical bars and coins, or digital coins, or instruments such as gold ETFs (exchange-traded funds), to diversify their holdings and potentially hedge against crashes in the value of cryptocurrency, stocks, and bonds.
Gold aligns perfectly with the investment mantra of “not putting all your eggs in one basket” — providing a safety net against events that may plummet the value of popular investments like cryptocurrency and stocks.
“Like any good financial advisor, we highly recommend using gold to diversify your portfolio. Gold is a low-risk, easy-to-access wealth-building tool that can balance out the volatility of other investments like tech stocks or cryptocurrency. It yields the best return when held over a longer period of time, but many younger investors just don’t know about it yet!”, said Plume.
Gold Guaranteed Coin Mining (GGCM) has launched the Gold Guaranteed Coin (GGC), which uses blockchain technology to store physical gold digitally.
According to its statement, The GGCM will run on Binance Smart Chain (BSC). All GGC tokens are initially locked within the smart contract. Investors can participate in mining projects, tokenize gold and place it on the blockchain with decentralized access.
The company highlights serval advantages of GGCM. For example, No fees or charges will apply to the trades and transfers. The company has acquired all the required licenses and permissions fitting Mongolian law for mining ventures.It will carry out NFT shareholding of its GGCM, denominate 70% of the mining revenue of GGCM in US dollars, which divides it into corresponding shares for leasing, and charge users the corresponding leasing service fee according to the corresponding leasing time to obtain leasing income.
The total supply of tokens will be 500.000.000.000, and it will be divided into blocks.
• A block: 2022–2024–25.000.000.000 (5%)
• Other blocks: 2025–2049–475.000.000.000 (95%)
GGCM is backed by powerful mining resources such as gold and other precious metals. It enables every investor to become the world’s mining natural resources owner, digitally storing gold. This safe value-saving tool is recognized by the public and can be circulated around the world.
As the cryptocurrency suffered from both a rise in the token price and a double increase in the value of gold itself recently, the company claims that GGC minimizes risk by ensuring real assets against fluctuations in fiat currencies.
Analysts from American multinational investment bank, JPMorgan Chase & Co have placed the “Fair Value” of Bitcoin (BTC), the world’s first cryptocurrency at $38,000.
The projection of the fair value of the premier digital currency came despite the current price of BTC trading more than 10% from the set price, however, the analysts, led by Nikolaos Panigirtzoglou, ascertained that the fair value was estimated based on the extreme volatility of the digital asset which they say is about four times as high as that of Gold.
Bitcoins opened the year to a very bearish run, with prices falling massively on a continuous run from the All-Time High (ATH) above $68,000 back in November to a low of $33,184.06 in January.
However, renewed investor sentiments in the traditional markets have had a significant rub off on Bitcoin as it has been on an uptrend for the better part of February. The price of BTC at the time of writing was hovering around $44,076.25 to $44,500 as it looks to break through the $45,000 resistance.
These impressive price runs seem not to have impressed Panigirtzoglou and his team who suggested that the “fair value” of Bitcoin would rise to $50,000 in a scenario where the volatility level narrows to three times, a possibility that seems impossible, at least, in the near term.
With more funds injected to acquire Bitcoin, the cryptocurrency is poised to stabilize over time, but the analysts pointed out that the step back amongst institutional investors seen in the BTC ecosystem is fueled by the fears in the volatility of the cryptocurrency.
“The biggest challenge for Bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption,” they wrote.
Despite the bearish fair value estimation the analysts pointed at, JPMorgan still maintains a bullish price target of $150,000, up from the projected $146,000 estimated back in January 2021.
Amid Bitcoin (BTC) posting a significant price recovery since early February, JPMorgan analysts suggested that the “fair value” of BTC is actually lower than its market price on Tuesday.
The current fair-value level for BTC is around $38,000, JPMorgan strategists said in the bank’s latest investor note published on Tuesday. Led by JPMorgan crypto market analyst Nikolaos Panigirtzoglou, the strategists estimated the “fair value” based on Bitcoin being nearly four times as volatile as gold.
The “fair value” of Bitcoin would rise to $50,000 in a scenario where the volatility level narrows to three times, the strategists suggested, adding:
“The biggest challenge for Bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption.”
At the time of writing, BTC traded around $43,000, or 12% up from the “fair value” suggested by JPMorgan. Bitcoin previously was inching close to $45,000, reaching around $44,900 on Tuesday, according to data from CoinGecko.
While being bearish on Bitcoin’s current “fair value,” JPMorgan’s strategists still forecast that BTC would surge far above $100,000 one day. According to the report, Panigirtzoglou’s long-term theoretical target for Bitcoin stands at $150,000, up from $146,000 forecasted in January 2021.
Related:Wall Street still not convinced on Bitcoin $100K this year: JPMorgan survey
JPMorgan’s analysts also noted that Bitcoin’s price correction in January looks “less like a capitulation” than the one recorded in May 2021, when BTC plummeted 50% from above $60,000 to around $33,000. However, some BTC metrics like futures open interest and reserves on exchanges are pointing to a “more long-standing and thus more worrisome position reduction trend” that began in November, the strategists reportedly added.
The strategists previously released a similar report in November, asserting that Bitcoin’s “fair value” was around $35,000, or about 45% lower than its market price of $63,281.
Japanese trading house Mitsui is reportedly planning to issue a cryptocurrency pegged to gold, local news agency Nikkei Asia reported Friday.
Called ZipangCoin (ZPG), Mitsui’s new digital currency will reportedly be issued as early as February and will be available to retail investors through cryptocurrency exchanges.
The stablecoin will be linked to gold prices at yen-denominated prices by Mitsui from the London Metal Exchange, with one ZPG valued equivalent to one gram of gold and guaranteed by Sumitomo Mitsui Banking.
According to the report, the new gold stablecoin will be initially offered through Mitsui’s proprietary crypto exchange and later made available on other exchanges. The trading house launched a crypto trading platform with Seven Bank Japan, registering the exchange with the Kanto Local Finance Bureau under Japan’s Financial Services Agency (FSA) approval.
The new gold-based digital currency is aimed at enabling new options to mitigate financial risk and hedge against inflation. Apart from offering new investment opportunities, Mitsui also reportedly plans to allow ZPG to be used for payments via smartphones at stores and supermarkets, as well as for bill payments.
Related:Mark Zuckerberg’s stablecoin project Diem officially shuts down
Mitsui is not the only Japanese company focused on stablecoin development. In November 2021, a consortium of 74 companies including Mitsubishi UFJ, Mizuho Financial and Sumitomo Mitsui Financial announced a trial of DCJPY, a bank deposit-backed yen-based digital currency.
According to Nikkei, Mitsui hopes to issue its retail-focused ZPG ahead of DCJPY.
