Musk is serious! Maybe the Federal Reserve will really disappear in the long river of history! So what impact will it have on the cryptocurrency world?
The hegemony of the US dollar collapses, and Bitcoin directly "usurps the throne"
As the "heart" of the global financial system, the disappearance of the Federal Reserve means the collapse of the US dollar credit system. According to historical data, for every 1% drop in the US dollar index, the price of Bitcoin will rise by an average of 2.3%. If the Federal Reserve suddenly disappears, the liquidity of the US dollar will be completely out of control, and a large amount of funds will flow into the cryptocurrency circle to seek safe havens. Referring to the case in which the non-agricultural data exceeded expectations in 2024, causing the evaporation of 3 billion US dollars in the entire network and the liquidation of 150,000 people, the collapse of the US dollar without the regulation of the Federal Reserve may trigger more extreme fluctuations. Bitcoin may soar by more than 50% in a single day and become a new "global reserve asset."
Regulatory Vacuum and Global Financial Fragmentation
The Federal Reserve is not only a monetary policy maker but also the 'invisible hand' of global financial rules. Its disappearance will lead to chaos in the regulatory frameworks of various countries—for example, the U.S. SEC may lose its cross-border enforcement power, and the European Central Bank may be forced to take over the dollar clearing system. This chaos may stimulate the wild growth of the crypto space in the short term (such as DeFi locked value potentially exceeding one trillion dollars), but in the long term, it may trigger a collective crackdown by sovereign nations. Imagine: without the suppression of the Federal Reserve, China and the European Union will accelerate the rollout of Central Bank Digital Currencies (CBDC), directly competing with Bitcoin for market share.
Flow of Funds and Ecological Reconstruction
After the disappearance of the Federal Reserve, the $7.6 trillion global capital previously used to purchase U.S. Treasuries will need new outlets. Referring to the scene when the Federal Reserve cuts interest rates by 50 basis points in 2024, and Bitcoin ETF experiences an inflow of $1.37 billion in a single day, this batch of funds will likely flood into the crypto space. But don't celebrate too early—without the dollar liquidity adjustments from the Federal Reserve, stablecoins (like USDT) may face a crisis due to the collapse of reserve assets, forcing the crypto space to shift towards Bitcoin-based settlements. At that time, whoever controls computing power, stablecoin issuance rights, and cross-chain protocols will be the new 'Federal Reserve' of the world.
