Morgan Stanley Predicts Bitcoin and CBDCs can Challenge the Dollar

Prominent investment firm Morgan Stanley’s experts have said in a ground-breaking analysis that Central firm Digital Currencies (CBDCs) and Bitcoin (BTC) may become strong competitors to the US dollar’s hegemony. The paper explores the changing dynamics of the world currency market, emphasizing the possible change brought about by the rise of Bitcoin.

Andrew Peel, Head of Digital Assets at Morgan Stanley, emphasizes how important it is that new laws continue to drive the acceptance of Bitcoin. Peel points out that the rise in popularity of the digital currency has been expedited by the U.S. Securities and Exchange Commission (SEC) approving spot Bitcoin Exchange-Traded Funds (ETFs). Weekly inflows into new products above $1.18 billion have made Bitcoin a central destination for investors looking for other investment opportunities.

The report draws attention to Bitcoin’s remarkable journey over the past 15 years, with a current ownership of 106 million people globally. The widespread acceptance is further exemplified by the presence of Bitcoin ATMs in over 80 countries, solidifying its status as a global digital asset.

While Bitcoin’s surge is capturing attention, the report also sheds light on the transformative potential of Central Bank Digital Currencies (CBDCs). These state-backed digital currencies have the capacity to reshape cross-border payments, providing an alternative to traditional intermediaries like SWIFT and mitigating reliance on dominant currencies like the U.S. dollar.

“[CBDCs] hold the potential to establish a unified standard for cross-border payments, which could diminish the reliance on traditional intermediaries like SWIFT and the use of dominant currencies such as the dollar,” states the Morgan Stanley report.

Block Research estimates that 49% of the market is currently dominated by Bitcoin, demonstrating its importance in the larger cryptocurrency scene. With a market share of approximately 51.4% in November 2023, Bitcoin continues to dominate the market and has a significant impact on altcoins and sentiment in general.

The paper proposes a paradigm change in the conventional U.S. dollar dominance, creating new opportunities in the global currency arena, as Bitcoin and CBDCs continue to alter the financial narrative.