Petrodollar Lapse: BTC & Gold Gain Strength As USD Alternatives Emerge

Juhi Mirza
Source: PYMNTS

The petrodollar lapse has opened up plenty of new avenues for the Saudi Arabian regime to ponder and hover over. With the regime’s decision to not renew the petrodollar agreement, the speculatory bandwagon is now inching toward supporting the stark US dollar alternatives, including gold and bitcoin, that the regime “could” integrate in its bid to promote the multipolar currency narrative.

Also Read: Petrodollar: Chinese Yuan Can Rise Globally, Put US Dollar in Jeopardy

Petrodollar End Means Rise of Gold, BTC, and Other Regional Currencies?

Saudi Arabia, Russia, UAE, Iraq, Kuwait, Oman, Algeria to Cut Oil Production Output Until 2023 End
Source: Vox

The Saudi Arabian regime is yet to renew its petrodollar agreement. The lapse, which is currently transliterated by many as a loud call for liberation from the shackles of the USD, is now echoing boldly across the world.

The end of the agreement has led several analysts and economists to prioritize their theories concerning the lapse. These theories have largely been inspired by the changing financial market dynamics in the present world, which are busy shaping perspectives.

The Saudi Arabian regime is said to be promoting the multipolar currency narrative by selling oil in multiple currencies except the USD. This decision casts a shadow of doubt on the integrity of the USD as a whole. With rising US debt metrics and a weakening of faith in the US economy, USD alternatives are rising at a rapid pace.

“If world players significantly reduce the use of US dollars, the US’ ability to issue dollar debt and earn dollars for exports will diminish and the nation’s economy will shrink, according to international economists.” As shared by Sputnik

The aforementioned move also opens up avenues for Bitcoin and Gold to leverage the current market dynamics. The US dollar can be derailed further if Saudi Arabia decides to diversify its portfolio by integrating bitcoin and gold into the system.

“However, the end of the agreement could be bad for the USD. In so far as Saudi Arabia decides to convert these non-USD currency proceeds into gold or BTC. More diversification of Saudi assets into gold or Bitcoin could help push up prices. Although this is contingent on the extent of diversification,” as shared by Daniel Krupka of the Coin Bureau.

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Divided Worlds

As the world gradually embraces a divided power dynamic, alliances like BRICS and ASEAN are becoming powerful global entities capable of challenging the might of the US dollar directly. With such power entities at play, the US dollar’s position as a global reserve currency stands at a precarious threshold.

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“The symbolism of the end of the US-Saudi petrodollar agreement marks a shift toward a future. The one that is further economically and geopolitically fragmented. It means that the world’s currency for top energy assets like oil is no longer priced just in dollars. Opening the door to alternative assets instead.”