Asset Classification - Gold is considered the state's reserve currency [1] - Digital gold serves as the network's reserve currency [1] - Fiat currency is the reserve currency for failing states [1]

Jeremy Siegel, a Wharton Business School professor and the chief economist at the investment management firm WisdomTree, stated to CNBC that Bitcoin may turn out to be a serious competitor to the U.S. dollar as the world's reserve currency. Speaking on the GENIUS Act, Siegel said, Bitcoin is 'a threat'. The GENIUS Act, enacted July 18 with bipartisan backing, demands a complete stablecoin regulatory framework. "What is interesting is that Bitcoin itself is a threat to the dollar as a reserve currency." ...

Dollar's Decline and Economic Impact - The US dollar has experienced a significant decline, losing over 10% of its value against other major currencies in the past 6 months, a drop not seen since 1973 [6] - A weaker dollar leads to more expensive imports, driving up prices for consumers at grocery stores, gas pumps, and for everyday products, reducing purchasing power [7][8] - While a cheaper dollar can boost certain American exports, the primary concern is the loss of confidence in the US economy by foreign investors [9] Factors Contributing to Dollar's Weakness - Ballooning debt, political dysfunction, and economic uncertainty caused by unpredictable tariff threats are fueling the loss of faith in the US economy [10] - Major global investors, including countries and sovereign wealth funds, are starting to seek investment opportunities elsewhere [11] - Foreign investors have begun selling off US treasuries, signaling a potential crack in the trust of the US government's ability to pay its debt [16][17] Geopolitical Implications - The US dollar's status as the world's reserve currency provides significant geopolitical power, allowing the US to exert influence through financial leverage [12][13] - A weakening dollar could lead to other currencies, like China's RMB, challenging its dominance, potentially diminishing America's influence [14] - If global investors lose confidence in America's ability to honor its financial obligations, it could erode soft power and make it harder for the government to pay its bills [20][21]

Dollar's Status and Diversification - Bank of America's survey indicates decreasing demand for US assets and investors holding the largest underweight position on the dollar in two decades [1] - While the US dollar is unlikely to lose its reserve currency status entirely, further diversification in its use by central banks is expected [2] - The dollar's share of foreign central bank reserves has decreased from 70% twenty-five years ago to approximately 58% currently, with a potential further decline to 50% [3][4] - An increase in global transactions using currencies other than the dollar is a noteworthy trend [4] US Treasuries and Foreign Demand - Foreigners have been reducing their allocation to US Treasuries for over 10 years, decreasing their ownership from 50% to 30% of the US Treasury market [6] - Despite still buying treasuries, foreign entities are purchasing less relative to the increasing amount being issued, which is concerning given the US's $2 trillion budget deficits [6] Currency Crosses and Market Focus - The yen is a key currency to watch, as its movement is linked to JGB yields, which in turn can influence US Treasuries [8] - The euro is also gaining prominence, with the European Central Bank (ECB) aiming for it to compete with the dollar as a reserve currency [9] Gold as a Reserve Asset - Central banks have significantly increased their gold holdings since the Biden administration restricted Russia's access to US dollars [10] - Gold has become the second-largest foreign central bank reserve holding in terms of value, surpassing the euro [11] - Gold is viewed as an important global reserve asset with further upside potential, beyond just being an inflation hedge or anti-dollar trade [12]

Market Trends & Potential Risks - Bitcoin could become the world's reserve currency due to the US debt situation [1] - All-time highs in US debt are coinciding with all-time highs in Bitcoin [4] - US government needs to control spending to preserve the American experiment [6] Coinbase Products & Services - Coinbase is moving into financial services like payments, borrowing, and lending, aiming to replace people's bank accounts [10] - Coinbase Business was announced for startups and medium-sized businesses to manage finances and payments [14][15] - Partnership with Shopify to power USDC payments for Shopify merchants and an AMEX Bitcoin card were announced [16] - Coinbase has launched a credit card with AMEX and a debit card with Visa [18] Regulatory Landscape - Regulation will be a huge boon for crypto, and Coinbase is actively working to get legislation passed [26] - The Stablecoin Act, the Genius Act, and the Clarity Act need to be passed into law [27] Partnerships & Investments - Coinbase is an equity holder and the largest distribution partner for Circle (USDC) with a substantial economic arrangement [19][20] - Coinbase would consider buying Circle if they were interested [22] Company Performance & Strategy - S&P 500 index inclusion has made Coinbase's stock less volatile [23][24] - Coinbase is shipping product at a startup pace [17]

Dollar's Status and Value - The dollar is a reserve currency due to its store of value and usefulness in trade and financial markets, providing the U S with privileges like lower borrowing costs and increased borrowing capacity [1] - The dollar is unlikely to lose its reserve currency status in the next 5-10 years due to the lack of a viable alternative [2] - A dominant reserve currency's value can fluctuate, and the dollar may be in a period of trending down against various currencies [3] Gold as a Reserve Asset - Central banks' purchases of gold are significant and have been increasing [5] - Gold is considered an investment because it doesn't default, a factor that some investors value even more than inflation-indexed securities [6] - Central banks have historically held gold as a reserve for hundreds of years, and there's a return to that mindset [6][7] Tariffs and Trade - Tariffs of the current scale and scope in the U S haven't been seen in decades and have broad economic implications [9] - Tariffs generate revenue for the government, divert some trade into the U S, and onshore some investment [10] - Modeling the effects of tariffs at the current level, such as 10%, is a complex exercise [10]