Will Crypto Play a Role in Ending the Dollar's Dominance?

A multipolar financial system is clearly on the horizon, thanks to recent geopolitical tensions, US President Donald Trump's trade barriers, and new digital asset strategies emerging.

These factors have intensified the long-simmering drive toward de-dollarization .

According to the emerging narrative in global markets, major changes are on the horizon for the international monetary system, which the dollar has dominated for the past eight decades.

Digital currencies and payment systems have a function in this changing global dynamic.

The dollar acts as a reserve currency for international trade. However, as the United States' share of global GDP declines, this is becoming more difficult.

The reduction in US security assurances to only those partners who agree to join a bilateral trade arrangement, tariffs, and currency depreciation is likely to undo the world order.

President Trump may also exaggerate the global community's eagerness to accommodate American demands.

For instance, the European Union would prefer autonomy from the United States over accepting a bad economic deal.

The euro, however, is unable to function as a global reserve currency due to the disintegration of the European Union's sovereign debt market, and its GDP growth has been stunted more than that of the US.

The only viable alternatives to the dollar that the Europeans have considered so far are cryptocurrency and gold.

This is happening right now, with cryptos like Bitcoin gaining traction due to wider global adoption, and gold is at record highs as central banks pile in.

The potential value of crypto will increase as its usage as a payment method takes off.

Meanwhile, there has been some rethinking of the dollar's position as the world's reserve currency, which has been in place since WWII.

Although the dollar's value is at record highs, experts caution that its position as the primary reserve asset may not be sustainable, with Trump opening up economic wars on all fronts.

Friends and foes alike are bracing for Trump's reciprocal tariffs on April 2, which he calls Liberation Day.

Participants were apprehensive about the dollar's future at the latest World Economic Forum in Davos. Economists have pointed to the growing US debt and the global financial system's increasing fragmentation as signs of imminent change.

Economist Kenneth Rogoff of Harvard University observed that the United States dollar's "exorbitant privilege"—its exceptional advantages—could not continue forever, particularly given that interest payments paid by the federal government exceed the budget for national defense.

Still, supporters of the dollar's status as a reserve currency continue to bet that the greenback will remain the focal point in the global system.

Nevertheless, they also erred in their assessment of cryptocurrency.

The rise of Bitcoin threatens the US currency, and Trump will have to make a decision.

The US president has made conflicting remarks regarding cryptocurrency and the dollar. In an effort to increase exports and decrease imports, he advocated devaluing the currency. But he nevertheless encouraged foreigners to continue using it.

Trump even threatened penalties on those countries, which would move away from dollars.

It's puzzling that he aspired to control the cryptocurrency market. It's the same as having web ownership. Few think Trump lacks in-depth knowledge of the international monetary system. That is not his responsibility.

A game-changer would be if his administration could transform the tariff guy into a worldwide balancer. However, it could be hazardous for the dollar if not handled properly.

Rather than wondering if the de-dollarization movement will persist, we should be concerned about how it will develop.

The World Economic Forum's economists foresee a change toward a multipolar monetary system in which the dollar's hegemony will be challenged.

However, according to those worried about market instability, a sudden change could result in a 5% drop in global GDP, which would be a more devastating shock than the financial crisis of 2008.

Another element of this financial progression is Trump's policy toward digital assets. The president has taken steps to prepare for a future where traditional reserve methods are inadequate, as seen by his executive order to construct a digital asset stockpile, which he signed upon returning to office.

During his campaign, Trump promoted himself as the "crypto president," a title that belied his seeming love of digital assets.

Now, he's implementing policies to support that position, including measures to encourage blockchain innovation, remove regulatory hurdles, and, most importantly, establish a Bitcoin reserve.

A national reserve for digital assets is consistent with the overarching goal of decentralizing the financial system.

As states seek to establish strategic reserves, the Trump Bitcoin reserve idea is likely to gain support. This follows a worldwide trend in which nations like El Salvador have adopted Bitcoin as part of their national monetary systems.

But the real question is: Can digital assets become a hedge against the dollar's decline in the global monetary system?

BlackRock CEO Larry Fink is the latest to voice that view aloud . Fink expects the dollar's position as the world's reserve currency to be in jeopardy and that crypto may take the US currency's place in the global order.

The prediction comes from the top leader in the world's asset management industry, Larry. He is responsible for $10 trillion in assets under management, and his calling on the shift is significant.

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Jacob Phillips entered crypto in 2018, co-founded Lombard in 2024, focusing on Bitcoin liquidity and staking solutions to bridge DeFi and CeFi. In this Blockcast episode, Jacob reflects on Lombard's core mission to enable secure, permissionless Bitcoin staking and liquidity through its liquid staking token, LBTC. He highlights the challenge of trustless Bitcoin DeFi and the importance of balancing decentralization with institutional security.

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