US dollar continues to fall as digital currencies rise

Throughout 2017, the US Dollar witnessed the worst performance since 2003. Oppositely, decentralized cryptocurrencies, led by bitcoin, flourished prominently during the past year, which reflects the public's heightened interest in the economic model of blockchain based currencies. Some researchers believe that the mainstream acceptance of cryptocurrencies is a contributing factor to the decline of fiat currencies, especially the US Dollar.

The US dollar ended 2017 on a bad note, having seen a major decline in value. Records show that this decline was the currency’s worst since 2003. It continued to fall throughout the entire year, especially in the past three months.

However, 2017 was not bad for all types of currencies. Cryptocurrencies, such as bitcoin, flourished prominently and reached new all-time highs repeatedly. Bitcoin currently has a market valuation of $227 billion. A comparatively lesser known cryptocurrency, ripple, also made news with its recent rise.

Bitcoin’s rise in 2017 was a dramatic one. The coin is notorious for high-rate volatility, but it succeeded to grow by almost 1,400% in the past year. The currency did see some short-term falls, due to increased regulations and stricter trade rules. However, its long-term rise was undoubtedly impressive. Other digital currencies, such as ethereum, ripple, and litecoin, have also experienced notable gains.

In contrast, the dollar’s long-term fall came as a shock. Passage of tax cuts and other factors usually bring up the currency’s price. Last year, however, they could not save the dollar from plummeting. Meanwhile, the dollar’s counterparts are strengthening. Currencies like the Japanese yen, Chinese yuan, and euro, have seen substantial gains recently.

The dollar might rebound

Some analysts were of the view that US dollar is bound to bounce back back in 2018, after experiencing such a downfall. However, most analysts were not as optimistic. Predictions regarding the dollar’s further fall in 2018 have turned out to be true. thus far. Experts are unsure about the cause of this recent decline. The dollar’s decline was accompanied by a drop in US Treasury bond yields.

There has been some speculation concerning what the cryptocurrencies’ rise and a traditional currencies' fall indicates. Despite their impressive growth, cryptocurrencies still lack regulation and the industry is highly volatile on a whole. Experts used to believe that these factors will never allow these currencies to form an alternative financial network.

Regardless of such opinions, bitcoin and other digital currencies continued to rise. Their upsurge in 2017 is making experts wonder if they underestimated this modern type of currency. Some researchers even believe that the mainstream acceptance of cryptocurrencies is a contributing factor to the decline of fiat currencies. What used to be regarded as a ‘short-lived bubble’ is now proving its potential with long-term gains.

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