Giant investment company Goldman Sachs predicts the value of the US dollar will go down. For both short-term and long-term scenarios, the dollar has a weak position. The decreasing value of the US dollar could propel the price values of safe-haven assets such as gold and Bitcoin.
Two Major Reason behind Downfall of the US Dollar
According to EM Strategy and Global FX at Goldman Zach Pandl, the value of the dollar will be at a lower position witnessed in 2018. This is due to two major reasons. First, the US Dollar Index will be affected badly by the coming US election. Second, the global pandemic will have severe negative effects on the US dollar.
“In our view, a ‘blue wave’ U.S. election and favorable news on the vaccine timeline could return the trade-weighted Dollar and DXY index to their 2018 lows.” said Goldman Sachs’s official.
Goldman Sachs is not the first investment firm to speculate a weak position for the US dollar in the future. After the Coronavirus pandemic, the governments and central banks focus on printing more cash thus providing a strong factor for high inflation.
Bitcoin as a Safe-Haven Asset
Based on the previous data, investors always go for safe-haven assets that can perform best in times of uncertainty. Historically, it is proven that gold always performed outstandingly when the equity and stock markets were affected by unnatural events or news in the market. Bitcoin, on the other hand, is new hedge investment assets as compared to gold. Since March’s low position, it has surged exponentially in the price value.
Since the beginning of 2020, Bitcoin has attracted a handsome amount of investment from institutional investors. MicroStrategy dedicated a large portion of its portfolio to Bitcoin. Similarly, the payment company Jack Dorsey-led Square also purchased $50 million. Giant payment firms, such as Visa and Mastercard, have also shown their interest in cryptocurrency.
The Q4 of 2020 is coming but the price is still unpredictable for the end of the year. Experts and analysts say it could show a record rally.