Bitcoin
BTC$48 706.73

-9.26%

Ethereum
ETH$4 059.61

-3.80%

Binance Coin
BNB$562.06

-5.77%

Tether
USDT$0.999843

-0.04%

Solana
SOL$200.85

-6.55%

Cardano
ADA$1.41

-10.52%

Central banks fashionably late to the party


05 Apr 2021

#Bitcoin

The last 12 months have been a rollercoaster ride for digital currencies and their holders. Countless millionaires have been made, and these once-niche instruments have finally been welcomed into the fold by institutional investors. Understandably, the spotlight has been firmly focused on legacy assets like Bitcoin, Ethereum and Litecoin. But beyond the explosive growth of these well-known coins, there are even more momentous developments taking place in the crypto space. As demand for digital assets skyrockets from Wall Street to Main Street, global central banks are now looking to get in on the action, too.

There has been serious talk of Central Bank Digital Currencies (CBDCs) for nearly 3 years now, and virtually all of the world’s major regulators had been working towards launching their own versions with varying levels of zeal. Then came COVID-19, prompting a rapid acceleration of implementation efforts.

Unsurprisingly, China is by far the most advanced CBDC project at present, having already run real-life tests of a range of digital currency electronic payment (DCEP) solutions in 2020. But China is not alone; early 2020 also saw the establishment of a cross-border working group representing five global reserve currencies (CAD, EUR, JPY, CHF and GBP) plus SEK.

US vs them

Not to be outdone by his counterparts around the world, Federal Reserve Chairman Jerome Powell made some uncharacteristically revealing comments about the United States’ CBDC project at a recent Congressional hearing. Powell went as far as to confirm that the Fed would aim to engage with the public on the digital dollar this year (2021), adding that it was up to Congress to give the US regulator the “legislative authorisation” for the project. The Fed chair made clear that the new CBDC would not be used to manipulate markets, underscoring the need to take great care with the design of the digital dollar to ensure that it doesn’t undermine the healthy functioning of the US financial system.

Everyone’s a winner

We have to face the facts that the call for digital alternatives to traditional fiat currencies is only likely to grow louder in the future as millennials and Gen Z begin to edge out older generations. The writing is on the wall: younger financial actors — with their ingrained culture of instant gratification — are simply not willing to wait several days for a payment to clear. What’s more, it gives disadvantaged, unbanked persons easier and safer access to money and can help fight the illegal activity that often goes hand in hand with digital currencies.

But it isn’t just consumers who stand to benefit. As the IMF reports, the cost of managing and transferring cash is high, and CBDC technology can slash expenses while also accelerating the implementation of central bank monetary policy.

Getting ahead of the competition

Whatever we might think, central banks and sovereign issuers are not a total monopoly. Indeed, payment systems’ inefficiencies have prompted the rise of numerous fintech/BaaS providers such as Square and Adyen to fill the void left by existing infrastructure. Moreover, CBDCs themselves already have competition in privately issued stablecoins like Tether and potentially Libra. As Fed Governor Lael Brainard put it: “the introduction of Bitcoin and the subsequent emergence of stablecoins with potentially global reach have raised fundamental questions about legal and regulatory safeguards, financial stability, and the role of currency in society”.

As such, these latest CBDC policy initiatives are absolutely necessary if central banks are to retain control over their own currencies in the crypto age.

Rebadged fiat or something new?

The only question that remains is whether these new currencies will be backed by anything. It’s plain to see that people’s confidence in fiat is waning as more and more wonder how long ever-lower interest rates and MMT can hold out. Many analysts have touted Bitcoin as a potential new “digital gold standard” for the global financial system of tomorrow. If this is true, we would need to see another massive increase in BTC’s value that would dwarf the booms of 2018 and 2020. Nobody knows what will ultimately come to pass, but one thing’s for sure: if Bitcoin is to become the global reserve, we could be in for a 10, 20 or even 30x moonshot in the years ahead!


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Top Cryptocurrencies with Price Predictions

# Crypto Prediction Accuracy CVIX Price 24h 7d Market Cap 7d price change
1 Bitcoin (BTC) BTC Bitcoin predictions 75.2% 50 $48 706.73 -9.26% -10.81% $920 132 432 479 BTC 7 days price change
2 Ethereum (ETH) ETH Ethereum predictions 82.4% 33 $4 059.61 -3.80% -0.61% $481 495 723 238 ETH 7 days price change
3 Binance Coin (BNB) BNB Binance Coin predictions 82% 32 $562.06 -5.77% -6.99% $93 752 606 143 BNB 7 days price change
4 Tether (USDT) USDT Tether predictions 94% 1 $0.999843 -0.04% -0.10% $74 146 017 092 USDT 7 days price change
5 Solana (SOL) SOL Solana predictions 69.2% 62 $200.85 -6.55% 3.29% $61 387 860 524 SOL 7 days price change
6 Cardano (ADA) ADA Cardano predictions 64.8% 72 $1.41 -10.52% -9.18% $46 958 385 031 ADA 7 days price change
7 USD Coin (USDC) USDC USD Coin predictions 95.6% 2 $0.999385 -0.03% -0.05% $39 796 534 169 USDC 7 days price change
8 XRP (XRP) XRP XRP predictions 65.6% 70 $0.834001 -10.39% -11.92% $39 404 303 399 XRP 7 days price change
9 Polkadot (DOT) DOT Polkadot predictions 62.8% 76 $29.08 -14.58% -17.21% $28 721 201 555 DOT 7 days price change
10 Terra (LUNA) LUNA Terra predictions 66.8% 65 $71.05 5.47% 63.77% $27 565 404 822 LUNA 7 days price change
11 Dogecoin (DOGE) DOGE Dogecoin predictions 66% 74 $0.175319 -12.61% -14.55% $23 209 784 837 DOGE 7 days price change
12 Avalanche (AVAX) AVAX Avalanche predictions 64.8% 73 $90.70 -14.60% -19.51% $22 013 847 272 AVAX 7 days price change
13 SHIBA INU (SHIB) SHIB SHIBA INU predictions 64.8% 73 $0.000037 -9.62% -5.62% $20 243 352 002 SHIB 7 days price change
14 Crypto.com Chain (CRO) CRO Crypto.com Chain predictions 57.6% 86 $0.595382 -5.97% -25.47% $15 041 152 356 CRO 7 days price change
15 Binance USD (BUSD) BUSD Binance USD predictions 96% 1 $0.999915 0.09% -0.01% $13 732 244 013 BUSD 7 days price change

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