Jerome Powellhis recent comments about cryptocurrency have caused a stir, with Federal Reserve Leader suggests they could become worthless if the US introduces its own digital banking currency. How true is this? Let’s break it down.
The main thesis in favor of this confirmation is that CBDC can reduce the need for Bitcoin (CRYPTO: BTC) and push the price down. If people start adopting CBDCs, it could create competition between Bitcoin and state-sponsored currencies. Additionally, CBDCs can offer greater stability and predictability than Bitcoin’s volatile nature.
Of course, anyone who understands the scope of Bitcoin will know that this is not the case at all. In fact, CBDC is going to be what eventually makes BTC visit the moon.
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But why?
The first immediate consequence of creating a retail CBDC will be a significant increase in liquidity in the digital market, which will immediately add billions of dollars to the crypto market, thereby eliminating even more barriers and increasing usage.
As CBDCs become more widespread, they can be traded on exchanges, increasing liquidity and stability. Exchanges such as Binance (CRYPTO: BNB) or Coin base (NASDAQ:COIN) could list these institutional tokens, generating a significant increase in traded volume.
See also: Fed’s Powell proposed wholesale CBDC implementation may bypass Congress
Moreover, CBDCs are inherently linked to government control. China, Iran, the United States and Latin America all create their own regional digital currencies and program them according to their laws and customs. This multipolar situation that the world is heading towards will only further position Bitcoin as a symbol of freedom and the backbone of the international digital economy, taking the place of the neutrality that Switzerland has occupied in the past.
Ultimately, if CBDCs are implemented, they will stimulate the use of digital currencies, provide the market with unlimited liquidity, add even more utility to Bitcoin and strengthen its position as the central hub of the international economy.
See also: US economy needs more tightening for Fed to hit target: Morgan Stanley
Disclaimer: The author has BTC exposure in his portfolio.
Image via Shutterstock & Pexels.
