 ▲ U.S. Dollar (USD), Bitcoin (BTC) / AI-generated image |
As the U.S. dollar’s status as the world’s reserve currency wavers, Bitcoin (BTC) and stablecoins are drawing attention as potential alternatives. However, some analysts point out that volatility and dependency issues create significant barriers to fully replacing the dollar.
The Economist reported through content uploaded to its official YouTube channel on March 9 (local time) that the dominance of the U.S. dollar, which has served as a pillar of global trade and finance for the past 80 years, is weakening. The dollar’s share of global foreign exchange reserves, which stood at 90% half a century ago, has now fallen to below 60%, with central banks increasingly diversifying their assets into gold and other currencies instead of the dollar.
Key factors behind the weakening dollar hegemony include U.S. President Donald Trump’s unpredictable economic policies and the introduction of tariffs. Policy uncertainty under the Trump administration and the United States’ massive public debt have raised doubts among global investors about the dollar’s safety. In particular, as President Trump is expected to expand his influence over the Federal Reserve in 2026, confidence in the dollar is likely to face further tests.
As instability surrounding the U.S. dollar grows, digital assets have been discussed as new alternatives, but practical adoption faces clear limitations. Bitcoin has demonstrated potential as a store of value, yet its extreme price volatility is a critical flaw preventing it from being adopted as a reserve currency. Stablecoins, which are pegged to fiat currencies, are efficient as payment instruments but remain dependent on the value of the dollar or other fiat currencies, making it difficult for them to establish an independent status.
The Economist projected that even if the perception of the dollar as a safe asset fades, it would be difficult for any single currency to fully replace it. The euro suffers from a relatively small sovereign bond market, while China’s yuan faces obstacles such as capital controls and an opaque government system that deter investors. Ultimately, the future financial system is likely to shift away from an era of single-currency dominance toward a multi-polar system in which various economic blocs compete.
As the dollar’s long-standing dominance underpinning global financial stability gradually declines, digital assets and regional currencies are fiercely competing to fill the void. Investors must fundamentally reassess their asset allocation strategies and closely monitor macroeconomic changes in preparation for a multipolar era in which no single asset holds absolute supremacy.
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