Why do gold and cryptocurrencies remain relevant amid the degradation of the dollar

In recent years, there has been a significant expansion of the global money supply, reaching $22 trillion. This phenomenon has sparked intense debates about the future of traditional currencies and alternative assets. Eric Balchunas, ETF senior analyst at Bloomberg Intelligence, raised an important question about the role of gold and cryptocurrencies during periods of deep economic transformation, analyzing the years 2023-2024.

The Challenge of Currency Devaluation: How the Dollar Is Losing Value

Balchunas’s key idea is recognizing two critical issues that shape the future of the financial system. The first is monetary devaluation, which directly affects the purchasing power of the dollar. Over the past decade, the money supply has doubled, creating a strong inflationary backdrop. This means that traditional currency gradually loses its value, and investors are forced to seek alternative stores of value.

Balchunas notes that without understanding this fundamental shift, it is impossible to truly assess why gold and other alternative assets are gaining new significance. Although gold’s performance in 2023-2024 seemed modest compared to tech stocks, its role as a hedge against monetary inflation remains undeniable.

Censorship and Control: Why Cryptocurrency Is Becoming a Solution

The second issue highlighted by the analyst is censorship and financial control, especially relevant in emerging markets. In countries with unstable political situations or authoritarian regimes, citizens often face restrictions on capital movement and asset confiscation. Cryptocurrency offers an alternative mechanism for preserving and transferring value without being subject to traditional financial restrictions.

This perspective reveals a deeper understanding of why cryptocurrencies are gaining popularity not only as speculative tools but also as practical solutions for protecting wealth amid political instability.

Integrated Analysis: Gold, the Dollar, and Cryptocurrency in a Unified System

Balchunas emphasizes that assessing the importance of gold and cryptocurrencies requires a comprehensive approach. Ignoring issues of currency devaluation and financial censorship leads to a misinterpretation of economic reality. In conditions where the dollar faces increasing pressure due to the doubling of the money supply, gold and cryptocurrencies serve complementary functions: the former as a traditional store of value, the latter as a digital asset ensuring financial independence.

Thus, the analysis presented by the Bloomberg Intelligence expert demonstrates that in an era of global financial transformation, the roles of gold and cryptocurrencies are not weakening but strengthening, providing investors with essential tools to protect their capital amid the degradation of traditional currencies and growing financial control.