As the US economy shows signs of degradation with rising US debt metrics in the mix, the US dollar is bearing the implications of it all. The USD is now being dubbed a currency slowly inching towards its demise. With countries ready to gnaw at the US dollar’s reserve currency status, the American currency is now scouring in a volatile arena, with its competitors closing in hard and fast.

Despite the plummeting data numbers and metrics, financial giant Morgan Stanley has backed the US dollar. The institution’s financial strategists are of the view that the USD is hard to outpace. The experts have stressed how the USD’s so-called “alternatives” will never get ahead of it, irrespective of changing economic narratives.

With Bitcoin touching new price highs, the discussions surrounding BTC replacing the US dollar have gained incredible traction in recent times. The US dollar has lost nearly 95% of its purchasing value since the 1970s, while BTC has always gained its valuation through consistent efforts and determination.

Such parallels have given birth to a phenomenon where US dollar alternatives have come up in the narrative. These alternatives are possibly assets or investments that help an investor secure stable returns, which the US dollar is not able to disseminate as of late due to its volatile nature and weakening economic statistics.

Cryptocurrency, or Bitcoin, has often been dubbed an equal competitor to the US dollar, with multiple experts often portraying BTC as an alternative to the USD.

However, experts at Morgan Stanley are presenting a new outlook, backing the US dollar’s legitimacy. David Adams, Morgan Stanley’s head of G10 FX strategy, shared how Bitcoin is too volatile to be considered a true replacement for the US dollar.

“If I’m holding a crypto coin that rises, say, 10% a month, I’m less likely to use that for trading. Instead just hoard it in my wallet to benefit from its price appreciation. Now, reasonable people can disagree about whether cryptocurrencies are going to appreciate or depreciate. But I’d argue that the best outcome for a dominant currency is neither.”

The experts later reiterated how it takes a considerable amount of time, possibly decades, for people to acknowledge a currency’s true legitimate status. Bitcoin being the newest frontrunner in the space may not accurately be dubbed a “haven” for investors in the long run.

Fallen Fortunes: USD’s Demise?

The US economy is presently suffering through a crackdown. The rising US debt numbers put more pressure on the US, triggering the US dollar to spiral further down.

Per Zerohedge, the inflation that has gripped America has not dipped after 2021. As a result, the US economy is now experiencing a whopping surge in its overall prices, a hike of nearly 19.4% in less than 4 years.

“Inflation has not fallen in a single month since January 2021, according to Zerohedge. This means that overall prices are up over 19.5% in less than 4 years. That is an average of 5.5% per year, effectively wiping out one-fifth of the US dollar’s purchasing power. We have not had a year-over-year inflation print below 3% in 37 consecutive months. Inflation is now building on previous years of inflation; we effectively have compounding inflation. How is this a “strong” economy?”

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Amid the bloc’s continued de-dollarization plans, officials have confirmed that a BRICS currency is currently in development. Iran’s ambassador to Russia, Kazem Jalali, recently stated that both Russia and Iran were collaborating on the project, according to a TASS report.

Additionally, Jalali said that diplomatic relations between Russia and Iran are currently in the midst of a “golden age.” The latter joined the economic alliance as part of its inaugural expansion effort at the bloc’s 2023 annual summit, becoming one of five nations to join the expanded BRICS.

BRICS Currency Officially in Development

Over the last year, the BRICS economic alliance has formulated a comprehensive strategy to implement a multipolar world. Indeed, it has continued to embrace competition with the West as it seeks increased de-dollarization policies. Now, the bloc may be in the midst of formulating the US dollar’s greatest challenger year.

The BRICS alliance has confirmed that a native currency is officially in development, according to a TASS report. Specifically, the Iranian ambassador to Russia, Kazem Jalali, discussed the work of both Russia and Iran in bringing the project to fruition.

“The creation of a new single currency within the framework of the association is what Russia and Iran are working on,” the official stated. Moreover, he noted that “more than 60% of bilateral trade” between the countries is settled in either rubles or rials. Thus, strengthening the overall flourishment of the local currency promotion within unilateral BRICS trade.

The plan will only continue to create a more diversified global economy. Although the United States dollar enjoys unprecedented dominance, that has significantly lessened over the last year. In 2023, reports note that one-fifth of all oil trades were made in other local currencies.

The greenback will only face increased opposition through the implementation of another widely used global currency. It is no secret that nations across the globe are seeking dollar alternatives. That is clearly seen in the gold rush that central banks throughout the world have been enthralled by throughout this year.

The creation of a BRICS currency will give many of these countries another option for global trade. With the alliance growing every year, it will only increase the number of nations that are completing cross-border transactions with the currency. Ultimately, this should further the bloc’s de-dollarization efforts to greater effect.

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More crypto startups are raising seed rounds and pre-A funding. Below, we look at some of the main beneficiaries of last week’s venture capital (VC) activities.

Humanity Protocol gets $30-million boost

Humanity Protocol, a decentralized identity solution, has reached unicorn status with a $1 billion valuation. This milestone came after securing $30 million in a seed round led by Kingsway Capital. 

Other investors included Animoca Brands, Blockchain.com, Hashed, Shima Capital, and 20 more industry leaders.

According to a Medium post by Humanity Protocol, the funds will be used to expand the team and develop products ahead of the public testnet launch in the second half of 2024.

The latest funding round comes only months after Humanity Protocol received strategic investment to build the “human layer” for web3.

The money came from several VC funds and individuals, including Polygon founder Sandeep Nailwal and Animoca Brands co-founder Yat Siu. 

Arch Labs secures $7 million

New York-based Arch Labs raised $7 million in seed funding to enhance its Bitcoin-native application platform. The round was led by Multicoin Capital, with participation from OKX Ventures, Portal Ventures, Big Brain Holdings, CMS Holdings, and Tangent. 

The company will reportedly use the funds to support the hiring of core developers, the launch of the Arch Network mainnet in the second half of 2024, and ongoing support for its app ecosystem. 

Arch Labs is developing a “bridgeless” trading experience directly on the Bitcoin (BTC) blockchain. It will feature a Rust-based zkVM called the ArchVM and a decentralized verifier network.

Uxuy clinches $7 million

Singapore-based Uxuy also secured $7 million. The pre-A funding round will be used to promote efficient, low-cost transactions of assets like Lightning Network taproot assets, ordinals BRC-20, and Runes. 

Binance Labs, UTXO Management (Bitcoin Magazine), JDI Ventures, Bixin Ventures, SWC Global and Matrix Partners were among the investors. 

Uxuy aims to provide a seamless trading experience across various blockchain networks and is incubated by Binance Labs.

Arcium nabs $5.5 million

Arcium, an on-chain confidential computing project from Bern, Switzerland, also secured $5.5 million in funding. 

Greenfield Capital led the round and saw participation from Coinbase, Heartcore Capital, Longhash VC, L2 Iterative Ventures, and several angel investors. 

Arcium is building a parallelized confidential computing network that leverages multiparty computation execution environments (MXEs) for secure computation on encrypted data. 

The funds will help expand development efforts and support the upcoming private incentivized testnet and public testnet phases.

Gnosis partners with Zeal, invests $2 million

Another winner in the latest VC funding rounds was digital wallet creator Zeal, who got into a strategic partnership with Gnosis, an Ethereum (ETH) sidechain, with part of the collaboration being a $2 million investment from Gnosis.

The $2 million commitment from Gnosis brings Zeal’s total funding to $9 million after the company raked in $7 million in a previous seed round.

Zest Protocol locks in $3.5 million

Wrapping up the week’s VC action, Bitcoin lending protocol Zest raised $3.5 million to enable BTC holders to generate yields on-chain. 

Led by billionaire investor Tim Draper, the seed round also saw contributions from Binance Labs, Flow Traders, Trust Machines, and others. 

Zest Protocol leverages the Nakamoto upgrade by Bitcoin layer-2 Stacks and the bridging asset sBTC, which is pegged 1:1 to Bitcoin, to create a fully native Bitcoin lending experience.

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