Honduras could be the next country to legalize Bitcoin as a form of payment, upsetting the status quo.
Bitcoin-bull Max Keiser first mentioned the possibility of this happening in a tweet last Friday. It said, “It’s happening….” and had an image of the Honduran flag on it.
Honduran President Xiomara Castro stated that El Salvador cannot be the lone country to dethrone the dollar.
“We can’t let El Salvador be the sole country to avoid dollar hegemony.” Honduras has the right to draw closer to the developed world.”
Bitcoin is rapidly being viewed as a way to get away from the currency.
It is said that all fiat currencies will eventually depreciate to zero. Excessive debt and currency devaluation have only one outcome in history.
Recently, flaws in the dollar’s hegemony have become more visible. As controversial as it may sound, we may be watching the dollar’s demise in real time as businesses consider alternatives.
For example, due to discontent with America’s security commitment to the Saudis, talks between China and Saudi Arabia to exchange oil in yuan have quickened. If successful, the move would seriously erode the dollar’s supremacy in the oil market.
In addition, as a result of restrictions related to the Ukraine conflict, Russia is increasingly relying on the yuan. Russian businesses are reportedly hurrying to open yuan accounts in order to keep cash flowing.
Despite the apparent dollar flight, according to James Fok, author of Financial Cold War: A View of Sino-US Relations from the Financial Markets, the yuan will not usurp the dollar anytime soon. According to Fok, China’s capital controls and rule of law make the yuan unappealing in comparison to the dollar.
“However, this does not imply that the renminbi will suddenly begin to compete with the dollar in any meaningful way.” There are a lot of other components that have to fall into place for it to work.”
Despite this, the rise of Bitcoin provides a viable alternative to both the yuan and the dollar. Furthermore, because of its fixed supply, it cannot be inflated to zero. Furthermore, because it is apolitical, it appeals to people who want to avoid factional squabbles.
If Honduras goes forward, how will the price react?
When El Salvador declared Bitcoin legal tender on September 7, 2021, the price of $BTC plummeted 20% to $42,800.
Bulls broke the downtrend and rallied to a new all-time high of $69,000 six weeks later, triggering a downtrend for the rest of September, hitting a local bottom of $39,500.
September 7 was primarily considered to be a trigger for a move upward, based on the assumption of governmental legalization of Bitcoin. The flash crash, on the other hand, defied expectations. Ran Neuner, co-founder of Onchain Capital, suggested that legacy institutions were guilty of wrongdoing.
Nonetheless, based on a sample of one, a government that makes Bitcoin legal tender will almost certainly cause a price drop, at least in the short term.
For the time being, all eyes are on Honduras.