Jeffrey Gundlach, DoubleLine Capital Founder & CEO, one of very few financial celebrities I like to listen to, recently communicated his outlook of the U.S. dollar, as well as the U.S. economic recovery. This might not necessarily be a coincidence given the much anticipated Jackson Hole Symposium this Friday, but no matter if it’s true or not, one can’t deny the fact that we are all at crossroads. Among other interesting points, he said that the U.S. has enjoyed the status of sole reserve currency globally for decades and it has been “an incredible benefit” (quote-unquote). “We also have the biggest military in the world, which just kind of goes hand in glove with being a reserve currency”, he said.

But in the aftermath of the lockdowns and pandemic that continues to wear on, the strongest economy in the world proved to be the Chinese economy. And the U.S. economy has bounced back with a lot of consumption. A lot of that consumption is going to China. “It’s one of the reasons China has such a strong economy” – Gundlach stated. China made no secret of the fact that they want to be a global player and have at least a seat at the table of global reserve currency status.” We are looking at a roadmap that is clearly headed towards the U.S. dollar losing its sole reserve currency status” – he said. ”The value of the dollar is so high because we enjoy global reserve currency status. And we don’t really respect it enough. We take it for granted, I guess.”

The dollar has been in a series of declining highs for decades. It goes back to the ’80s. “And for that reason, I think when we get to the next break to the lower level, the dollar is going to go past the most recent low of around 80 and even take out the low of 70. So I think there’s easily a 25% downside in the U.S. dollar”. Okay, this is just one of so many opinions on the future of the now prevailing currency, but what can the U.S. Fed along with global monetary authorities do if the U.S. dollar stops playing the “risk-on/risk-off game” and gets closer to its fundamentals?

Bitcoin and other cryptocurrencies could replace fiat currencies like the U.S. dollar over the next 5-10 years.  This conclusion was reached by several bank executives, led by Linda Pavchuk at the accounting firm Deloitte, who recently conducted a survey among bankers.  “We have unveiled a seismic shift in financial services associated with the evolution of digital assets based on the blockchain,” the report said. It has nothing to do with the current bullish cycle in the cryptos or, vise versa, fears of more ongoing legislative actions like China did this Spring. It’s simply about studying trends and their historical parallels.

Meanwhile, the Dogecoin Foundation has taken center stage as it strives to provide support for Dogecoin (DOGE) through development and advocacy work. Billy Markus, the co-creator of the Shiba Inu-themed coin, became one of the board advisors of the foundation. The Foundation, launched on August 16, said in a statement that it is “looking to the future of the broader Dogecoin ecosystem” and is all set to announce new projects in the coming weeks. 

The organization aims to put in place a structure so as to hire full-time staff who will work towards faster integration and easier APIs for financial, social, and charitable projects that want to use DOGE. “Dogecoin has been established since 2013, has had millions of transactions on its network and is worth billions – anything new trying to claim the trademark of Dogecoin is doing so in bad faith,” explained Markus.

Apparently, Bitcoin and other cryptos’ institutional acceptance is gaining momentum. PayPal  (PYPL) enjoyed a slew of relevant reports. Thus, Paypal-owned (PYPL) mobile payment platform Venmo last Tuesday rolled out a feature that would offer holders of its credit cards to automatically buy cryptocurrencies with the cashback earned on their purchases. Reportedly, Venmo cardholders will be able to buy Bitcoin, Ethereum, Litecoin and Bitcoin Cash through the «Cash Back to Crypto» feature and will not be charged fees for the transaction.

Also, as we remember, back in March PayPal began offering cryptocurrency transactions in the U.S., allowing customers to use coins to shop with the participating vendors. Now, the digital payment company said it plans to expand its cryptocurrency services outside of the U.S., allowing customers in the U.K. to buy, sell and hold Bitcoin and other cryptocurrencies. The payment services provider’s U.K. crypto services launch marks its first international expansion, which it hopes will lead to further global use of decentralized coins and other digital currencies that may be developed by corporations and central banks. 

Although Amazon.com flatly denied a possibility of starting to accept crypto payments, Bloomberg wrote an article entitled “Amazon Has 1.55 Trillion Reasons to Start Accepting Crypto”. The story began with Amazon’s post in its careers section unveiling its efforts to identify candidates for a senior position, which was entitled “Digital Currency and Blockchain Product Lead”. According to the relevant job description, the person’s responsibilities will entail “leveraging the domain expertise in Blockchain, Distributed Ledger, Central Bank Digital Currencies and Cryptocurrency to develop the case for the capabilities which should be developed, drive the overall vision and product strategy, and gain leadership buy-in and investment for new capabilities”. Initially commenting on that post, Amazon’s spokesman said “We believe the future will be built on new technologies that enable modern, fast, and inexpensive payments, and hope to bring that future to Amazon customers as soon as possible.”

 

 

Why do institutions rush to accept crypto payments? Quite reminiscent that, for example, Tesla (TSLA) got Bitcoin acceptance-related impairment loss in Q2 this year because of the crypto downfall in the wake of China’s crypto mining ban. Yet, its CEO Elon Musk kept insisting that his decision to suspend Bitcoin payments had nothing to do with the token’s price fluctuations, but rather his main concern remained about its environmental impact of mining.

Indeed, vendors want to extend crypto payment options hoping to increase their sales, and reality shows they are right. Many global shoppers often refrain from buying foreign stuff for their local currencies because of frequently disadvantageous exchange rates and voracious bank commissions. We know that cryptocurrencies aren’t spoiled by such adversities.

In addition, bulk remittances that are often needed for wholesale vendors and their customers, are a pain in the neck for classic fiat currency accounts requiring a lot of outgoing data including valid residential addresses, correct name spellings, routing numbers, etc. Sending cryptos like jiffy spares a lot of precious time for them – often a lot more time than the cost of the implied price volatility risks. There is a lot to think about in that regard!