The USD Index has fallen below 90 for the first time since April 2018, a 2.5 year low for the world’s reserve currency.
As the globe, and specifically, the United States of America, continues to suffer from widespread economic turmoil, general uncertainty, and increased inflation, the USD has taken a sizable hit to its value.
Throughout this year, the USD Index has dropped approximately 7% from around 97 to its current level of 89.96.
As global fiat currencies struggle under the current socio-economic conditions, cryptocurrencies like Bitcoin are experiencing the opposite effect.
Hedge Against Inflation
While global fiat currencies hit hardships and multi-year lows, Bitcoin is seeing quite the opposite.
Since the beginning of 2020, Bitcoin has increased in value by almost 350 percent, with its market cap increasing from $120.4 billion at the beginning of the year to $419.5 billion at present.
As the world attempts to figure out the best way to move forward economically, Bitcoin and its predetermined supply and production rate seem to be providing stability among the uncertainty.
Can Bitcoin Replace Fiat Currency as a Store of Value?
Traditionally, when someone wants financial stability, they will hold ‘safe’ assets such as gold, real estate, or a globally dominant currency.
With a global pandemic and stalled global economy being partially propped up by fiat inflation, many users and institutions are starting to see Bitcoin as a safer treasury asset than its alternatives.
There are many examples of institutions following this thought process. One prime example being MicroStrategy, a member of the S&P SmallCap 600 Index, which owns over $700 million worth of Bitcoin and has plans to purchase an additional $650 million.
Michael Saylor, the CEO of MicroStrategy, decided that it would be safer for the company to have a portion of its treasury reserves in Bitcoin rather than USD, as he sees Bitcoin as a stronger hedge against inflation. So far, Saylor seems to be correct, as the digital asset continues its steady rise after recently overtaking its previous all-time high price.
Although daily price movements are not an indicator of long term strength or usability, Bitcoin continued to rally with an almost 20 percent daily increase.
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.