Citibank Analysts Discuss Claim "Bitcoin Will Replace the Dollar"!

A recent report by Citi analysts argues that stablecoins not only strengthen the dominance of the US dollar, but also challenge the long-standing belief that Bitcoin could one day end the supremacy of the US dollar.

In the Citi report, it was written, "Initially, cryptocurrencies like Bitcoin were considered as a rival to the currency issued by central banks," and added: "Indeed, some believed and continue to believe that Bitcoin could put an end to the hegemony of the US dollar. However, stablecoins, which make up more than four-fifths of the cryptocurrency transaction volume, challenge this statement."

The report emphasizes that most stablecoins are pegged to the US dollar and issuers hold their reserves in US dollars and US Treasury bonds. Citi suggests that increasing regulations and legitimacy regarding stablecoins could further solidify the global dominance of the dollar.

"Greater regulatory clarity could potentially further increase the appeal of stablecoins," Citi analysts said, adding: "If that happens, stablecoin issuers' demand for U.S. Treasury bills could increase from about 1% of purchases today. Rather than displacing the dollar, this variant of cryptocurrency could make the dollar more accessible to the world and consolidate the U.S. currency's long-standing global dominance."

Citi's report also included data showing the increasing importance of stablecoins. According to the findings, stablecoin activity reached record levels in the first quarter of 2024 with a transaction value of 5.5 trillion dollars, surpassing Visa's 3.9 trillion dollar volume during the same period.