The BRICS alliance is taking steps to reduce the global primacy of the US dollar in international trade, potentially providing significant support to Bitcoin (BTC).
The BRICS—comprising Brazil, Russia, India, China, and South Africa—recently expanded its ranks to include Iran, Egypt, Ethiopia, and the United Arab Emirates. Together, these countries account for more than a third of the world’s GDP and are now exploring alternative international payment systems.
Country delegates met this week and agreed to move away from the dollar-based Swift system and instead develop a payment system based on national currencies. While Bitcoin is unlikely to become the currency of choice for BRICS countries, moving away from the dollar could benefit BTC, according to Noelle Acheson, author of the newsletter “Crypto is Macro Now.”
“Bitcoin’s narrative as a hedge against dollar depreciation will be strengthened as global demand for dollar-denominated trade at a time of increasing supply pulls the dollar down in relative terms,” Acheson wrote. He noted that despite their differences, the BRICS countries have common grievances with the U.S. on economic and geopolitical issues, which fuels their desire to create a dollar alternative.
The BRICS’ ongoing efforts to challenge the dollar’s dominance come as no surprise, given their combined economic weight and influence in global trade. While the dollar is not expected to lose its status as the world’s reserve currency anytime soon, the perceived shift in the global economic landscape could positively impact Bitcoin.
Acheson explained that the BRICS’ move to reduce reliance on the dollar could increase demand for hedge assets like Bitcoin. Cryptocurrency advocates often argue that Bitcoin acts as a buffer against uncertainty, citing its rarity and perceived independence from traditional markets.
While the BRICS countries are not expected to immediately dethrone the dollar, their search for alternatives signals a shift in economic and geopolitical realities. Even Russian President Vladimir Putin acknowledged last week that the time for a common BRICS currency is not yet ripe, citing the difficulties of creating a viable replacement.
*This is not investment advice.