Massive Selling Wave Worth $2.5 Trillion Potentially Impacting USD, Analysts Wary Due to Trade Wars Dampening Dollar's Allure: Analysis Report
In a potential blow to the U.S. dollar, Asian investors could unload billions of dollars in U.S. currency due to escalating trade tensions, posing a significant threat to the greenback's value. According to Eurizon SLJ Capital's analysts Stephen Jen and Joana Freireat, Asian exporters and institutional investors have amassed an enormous US$2.5 trillion USD hoard that could hit the U.S. dollar hard if disputes escalate and the dollar weakens.
Bloomberg reports that the dollar gauge has descended around 8% from its February high, while Asian currencies have grown stronger against the greenback in the past month. President Trump's April signing of an executive order imposing a 10% tariff on all imported goods and his proclamation of reciprocal tariffs against numerous countries have heightened trade hostilities.
US-led trade conflict developments could trigger a massive outflow of USD by Asian investors, as a substantial number of them seek to redeem capital or fortify their defenses against a diminishing USD. The analysts predict this shift could leave the dollar facing a USD$2.5 trillion "avalanche" of selling pressure.
With the Trump administration pursuing trade deals with more than a dozen countries and high-level economic discussions with Chinese officials on the horizon, investors will closely watch the unfolding situation to gauge its impact on currency markets. In the meantime, the dollar might continue its decline, while Asian currencies could gain strength.
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Industry Announcements
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Current Market Analysis
- Bitcoin: Recent market volatility might indicate renewed selling pressure, but with a potential floor close to US$30,000. Keep a watchful eye on Asian investor activity and overall trade tensions for future price movements.
- Ethereum: Despite being a leading altcoin, Ethereum's price remains sensitive to broader market conditions, world events, and the underlying strength of Bitcoin. A weak USD could potentially bolster Ethereum's value if traders seek safety in digital assets.
In a worst-case scenario, intensifying trade conflicts and the dissipating appeal of the USD might precipitate a global domino effect, impacting various asset classes and capital markets worldwide. Stay updated with the latest news and insights as these events unfold through The Daily Hodl.
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should conduct their due diligence before making any high-risk investments in cryptocurrencies. The Daily Hodl does not endorse or recommend specific cryptocurrencies, nor does it serve as an investment advisor. The Daily Hodl participates in affiliate marketing.
Enrichment Data
- Trade Tensions: Analysis shows that trade tensions can have negative effects on currency markets, particularly when investors reallocate their holdings away from currencies associated with unstable political climates or economic policies.
- US Dollar (USD): The USD is the most widely-held reserve currency globally, providing the U.S. with significant influence over international trade and currency markets. However, as other countries introduce challenging policies that affect capital flows and investment, the USD's dominance can be tested.
- Asian Countries and Currencies: Asian countries like Taiwan, China, Korea, and Japan hold considerable foreign exchange reserves, often in USD. The potential for massive selling could see strain on these countries' foreign exchange reserves and destabilization in their currency markets.
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- The trading cup competition for cryptocurrencies, the International Crypto Trading Cup, has been launched. (May 9, 2025)
- T-Rex, a purpose-built blockchain platform, has successfully raised $17 million for its Web 3.0 transformation. (May 8, 2025)
- Flipster, an esports platform, has partnered with a crypto exchange as its official partner. (May 7, 2025)
- Bybit, a crypto exchange, has recovered quickly from a recent hack, with fast liquidity recovery. (May 7, 2025)
- ProMeeters, an influencer platform, has announced measures to boost the impact and long-term earnings of influencers. (May 6, 2025)
- DogeOS, a cryptocurrency, is expecting a bullish outlook after securing a $6.9 million funding round. (May 6, 2025)
- Casper 2.0 has gone live on the mainnet, ushering in the era of real-world asset integration. (May 6, 2025)
- In the wake of intensifying trade conflicts, Bitcoin might experience renewed selling pressure but could find support near US$30,000. Asian investor activity and overall trade tensions remain key factors for future price movements.
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