{"id":9454,"date":"2025-09-01T18:38:08","date_gmt":"2025-09-01T18:38:08","guid":{"rendered":"https:\/\/bitunikey.com\/news\/dollar-dominance-dwindles-to-1990s-lows-gold-vaults-and-bitcoin-etfs-fill-the-gap\/"},"modified":"2025-09-01T18:38:23","modified_gmt":"2025-09-01T18:38:23","slug":"dollar-dominance-dwindles-to-1990s-lows-gold-vaults-and-bitcoin-etfs-fill-the-gap","status":"publish","type":"post","link":"https:\/\/bitunikey.com\/news\/dollar-dominance-dwindles-to-1990s-lows-gold-vaults-and-bitcoin-etfs-fill-the-gap\/","title":{"rendered":"Dollar dominance dwindles to 1990s lows \u2014 gold vaults and Bitcoin ETFs fill the gap"},"content":{"rendered":"<p><\/p>\n<div class=\"post-detail__content blocks\">\n<p class=\"is-style-lead\">Global reserves are undergoing a dramatic realignment as gold climbs to a thirty-year high, Bitcoin ETFs expand rapidly, and the U.S. dollar slides back to levels last seen in the Clinton era.<\/p>\n<div id=\"cn-block-summary-block_01ea3e5ec37025353907330aeff00f92\" class=\"cn-block-summary\">\n<div class=\"cn-block-summary__nav tabs\">\n        <span class=\"tabs__item is-selected\">Summary<\/span>\n    <\/div>\n<div class=\"cn-block-summary__content\">\n<ul class=\"wp-block-list\">\n<li>Gold\u2019s share of reserves hit 24% in Q1 2025, a three-decade high, while the dollar slipped to 42%, its lowest since the 1990s.<\/li>\n<li>Central banks boosted gold holdings to near 1960s levels, led by Poland, China, Turkey, and India, citing sovereignty and geopolitical risk.<\/li>\n<li>Dollar credibility is strained by 120% debt-to-GDP, nearly $1 trillion in annual interest, Fed policy uncertainty, and new U.S. tariffs.<\/li>\n<li>Dedollarization is advancing through local settlement systems, yuan- and euro-based trade deals, and BRICS efforts to expand national currency use.<\/li>\n<li>Bitcoin is gaining reserve-like traction, with ETF inflows topping $55 billion and volatility easing to 2.2 times gold.<\/li>\n<\/ul><\/div>\n<\/div>\n<p><!-- .cn-block-summary --><\/p>\n<h2 class=\"wp-block-heading\">Gold surges to three-decade high as dollar slips to 1990s levels<\/h2>\n<p>Fresh data for Q1 2025 reveals a critical repositioning in how the world stores its financial safety net.\u00a0<\/p>\n<p>Gold\u2019s share climbed three percentage points to 24%, the highest level in three decades, while the U.S. dollar\u2019s portion fell two points to 42%, a low not seen since the mid-1990s. The euro held steady at about 15%, keeping its third-place position in the global hierarchy.<\/p>\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\">\n<div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Gold is replacing fiat currencies as a reserve currency:<\/p>\n<p>Gold&#8217;s share of global international reserves rose 3 percentage points in Q1 2025, to 24%, the highest in 30 years.<\/p>\n<p>This marks the 3rd consecutive annual increase.<\/p>\n<p>Meanwhile, the US Dollar&#8217;s share declined ~2 percentage\u2026 <a rel=\"nofollow\" target=\"_blank\" rel=\"nofollow\" href=\"https:\/\/t.co\/yDjcnT62Jh\">pic.twitter.com\/yDjcnT62Jh<\/a><\/p>\n<p>\u2014 The Kobeissi Letter (@KobeissiLetter) <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/twitter.com\/KobeissiLetter\/status\/1962235795622035767?ref_src=twsrc%5Etfw\" target=\"_blank\" rel=\"nofollow\">August 31, 2025<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n<p>Only a few years ago, in 2020, gold made up just 13% of total reserves and was often seen as a relic rather than a core tool.\u00a0<\/p>\n<p>The metal crossed 20% in late 2024, surpassed the euro, and now sits firmly as the world\u2019s second most widely held reserve asset.\u00a0<\/p>\n<p>Amid this, data from the European Central Bank <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.businessinsider.com\/central-banks-gold-purchases-official-reserves-prices-2025-6\" target=\"_blank\" rel=\"nofollow\">shows<\/a> official gold holdings are nearing levels last recorded in the 1960s, reversing decades of post\u2013Cold War drawdowns.<\/p>\n<p>The dollar, although still dominant, is steadily losing ground. At the start of the century, it accounted for nearly 70% of global reserves, but by the end of 2024 that figure had slipped to 58%.\u00a0<\/p>\n<p>When gold is included in the comparison, the dollar\u2019s effective share drops to 42%, close to where it stood during the Clinton administration.<\/p>\n<p>The euro followed a different path. After its launch in 1999, it briefly rose into the low 20% range during the mid-2000s and appeared to challenge the dollar\u2019s supremacy.\u00a0<\/p>\n<p>Structural weaknesses and recurring debt crises stalled that rise, leaving its share stagnant at about 15% without the buying momentum that has fueled gold\u2019s resurgence.<\/p>\n<h2 class=\"wp-block-heading\">Why central banks are buying gold<\/h2>\n<p>Behind the rise in gold\u2019s share of global reserves is a set of motivations that go well beyond asset performance or historical value.\u00a0<\/p>\n<p>Central banks are treating it as a shield of financial sovereignty, useful in guarding against sanctions, war, and fragmentation of global markets.\u00a0<\/p>\n<p>The freezing of Russia\u2019s reserves in 2022 triggered a rethink across capitals, and the European Central Bank later noted that gold demand surged after the invasion of Ukraine, highlighting its role as politically neutral wealth.<\/p>\n<p>World Gold Council survey data <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.gold.org\/goldhub\/research\/central-bank-gold-reserves-survey-2025\/strategic-considerations-in-reserves-management\" target=\"_blank\" rel=\"nofollow\">show<\/a> that around 59% of central banks consider trade conflicts or geopolitical risk important to their reserve strategy, especially in emerging-market banks (69%). At the same time, about 73% expect the U.S. dollar\u2019s share of global reserves to fall over the next five years.<\/p>\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\">\n<div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Why central banks are increasingly buying gold and Bitcoin\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/UVflys4loV0?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div>\n<\/figure>\n<p>Amid this, Poland has taken the lead, <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/goldsilver.com\/industry-news\/goldsilver-news\/poland-leads-global-central-bank-gold-rush-with-49-tonne-purchase-in-q1-2025\/\" target=\"_blank\" rel=\"nofollow\">adding<\/a> 49 tonnes in Q1 2025 to bring total holdings to nearly 497 tonnes, surpassing its own goal of holding 20% of reserves in gold.\u00a0<\/p>\n<p>Governor Adam Glapi\u0144ski explained the <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.linkedin.com\/pulse\/poland-has-more-gold-than-european-central-bank-money-metals-cccge\/\" target=\"_blank\" rel=\"nofollow\">stance<\/a> directly. \u201cGold will retain its value even when someone cuts off the power to the global financial system, destroying traditional assets based on electronic accounting records. Of course, we do not assume that this will happen. But as the saying goes, forewarned is always insured.\u201d\u00a0<\/p>\n<p>He further added, \u201cAnd the central bank is required to be prepared for even the most unfavorable circumstances. That is why we see a special place for gold in our foreign exchange management process.\u201d<\/p>\n<p>Meanwhile, China added 13 tonnes in Q1, pushing official holdings to around 2,300 tonnes, though many analysts believe the real figure is higher.\u00a0<\/p>\n<p>Turkey purchased 4 tonnes, India added 3 to reach 880, and steady buying has also come from Kazakhstan, Uzbekistan, Egypt, and Qatar.\u00a0<\/p>\n<p>Many of these countries are tied closely to China or Russia, a pattern the ECB has noted in its recent comments on reserve trends. The shared motive is a desire to limit exposure to reserves vulnerable to political influence.<\/p>\n<p>The scale of these moves is striking compared with the past. In the 1970s, gold prices jumped after Bretton Woods collapsed, yet central banks were often net sellers.\u00a0<\/p>\n<p>Buying momentum only took hold after the 2008 financial crisis, led by emerging markets. The pace then accelerated, with net purchases above 1,000 tonnes in 2022, 2023, and 2024 \u2014 levels never seen before, even in the inflationary 1970s.<\/p>\n<p>Moreover, surveys suggest the majority plan to keep increasing allocations in the coming year, a sign of how fractured and uncertain the global order has become.<\/p>\n<h2 class=\"wp-block-heading\">Dollar\u2019s fiscal and policy troubles<\/h2>\n<p>The global role of the U.S. dollar is beginning to face questions that were rarely raised in the past.\u00a0<\/p>\n<p>Federal debt has <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.foxbusiness.com\/politics\/us-debt-set-surge-120-gdp-federal-deficits-spiral-over-next-decade-under-new-projections\" target=\"_blank\" rel=\"nofollow\">risen<\/a> above 120% of GDP, climbing from about $27 trillion five years ago to more than $36 trillion today. Interest costs are nearing $1 trillion a year, equal to just over 3% of GDP, and have become the second-largest line in the federal budget after Social Security.\u00a0<\/p>\n<p>In late 2024, those payments were <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.federalreserve.gov\/econres\/notes\/feds-notes\/official-reserve-revaluations-the-international-experience-20250801.html#:~:text=Debt%20servicing%20costs%2C%20which%20were%20already%20higher,rise%20in%20interest%20rates%20(National%20Treasury%2C%202024).\" target=\"_blank\" rel=\"nofollow\">consuming<\/a> close to one-fifth of federal tax revenues, a weight not seen in decades and one that is increasingly shaping how reserve managers judge the dollar\u2019s future.<\/p>\n<p>Concerns about fiscal pressures are compounded by the direction of monetary policy. Inflation has eased from earlier peaks yet remains above the Fed\u2019s target.<\/p>\n<p>The Fed raised rates aggressively in 2022 and 2023, then moved into a cutting cycle in 2024. In 2025, markets remain split on the next step.<\/p>\n<p>Continued easing could support growth yet risks reviving inflation, while holding steady or reversing course would tighten conditions and slow the economy further.<\/p>\n<p>The lack of clarity has unsettled foreign holders of dollar assets. In a recent <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/discoveryalert.com.au\/news\/central-banks-moving-away-us-dollar-2025\/\" target=\"_blank\" rel=\"nofollow\">survey<\/a>, 70% of central banks named U.S. policy instability as a factor reducing their confidence, more than twice the share of a year earlier.<\/p>\n<p>Trade policy has further aggravated the situation. In 2025, the White House introduced a sweeping tariff package that imposed a 10% duty on nearly all imports, 30% on goods from Europe and Mexico, and 50% on Indian exports in response to Russian oil purchases, alongside new restrictions on Chinese goods.\u00a0<\/p>\n<p>Such abrupt measures were read in many capitals as signs that U.S. economic policy had become more unilateral, and that reliance on the dollar carried political as well as financial risks.<\/p>\n<p>The response can be seen in the steady advance of dedollarization.\u00a0<\/p>\n<p>Southeast Asia has built a local currency settlement system, bilateral trade in Asia, the Middle East, and Africa is increasingly priced in yuan or euros, and large emerging markets are urging companies to settle in domestic currencies.\u00a0<\/p>\n<p>China and Russia now <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cepa.org\/comprehensive-reports\/going-steady-china-and-russias-economic-ties-are-deeper-than-washington-thinks\/\" target=\"_blank\" rel=\"nofollow\">conduct<\/a> most of their trade in yuan and rubles, while dozens of countries have joined China\u2019s Cross-Border Interbank Payment System as an alternative to SWIFT.\u00a0<\/p>\n<p>Even U.S. allies are making small adjustments, with trade finance data showing a gradual decline in the dollar\u2019s share of invoicing and modest gains for the euro and yuan.\u00a0<\/p>\n<p>Within the BRICS group, leaders have framed greater use of national currencies as a long-term goal, describing it as a step toward a more balanced system.<\/p>\n<p>The dollar\u2019s dominance is not disappearing overnight, but the conditions surrounding it have changed.\u00a0<\/p>\n<p>Rising debt, unsettled policy, and protectionist trade moves are giving central banks stronger reasons to consider alternatives, and that shift is now visible in the choices they make.<\/p>\n<h2 class=\"wp-block-heading\">Bitcoin as digital gold, alongside bullion<\/h2>\n<p>Alongside gold\u2019s resurgence, attention has also shifted toward Bitcoin (BTC) as a modern counterpart.\u00a0<\/p>\n<p>Branded \u201cdigital gold,\u201d it offers scarcity through a fixed supply of 21 million coins and operates outside government control, qualities that attract investors seeking stability during periods of uncertainty.\u00a0<\/p>\n<p>Adoption has taken a different form from gold. Central banks are building reserves in bullion, while Bitcoin\u2019s momentum comes from private actors.\u00a0<\/p>\n<p>Institutional portfolios now hold crypto exposure on a scale that would have seemed unlikely only a few years ago, supported by the expansion of regulated products.\u00a0<\/p>\n<p>Spot Bitcoin ETFs have quickly become a major force in the market. Since early 2024, they have <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.coinglass.com\/bitcoin-etf\" target=\"_blank\" rel=\"nofollow\">attracted<\/a> more than $55 billion in net inflows, led by BlackRock\u2019s IBIT, which now manages over $80 billion in assets.\u00a0<\/p>\n<p>Meanwhile, gold ETFs <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.reuters.com\/business\/gold-etfs-drew-largest-inflow-five-years-during-first-half-2025-wgc-says-2025-07-08\/\" target=\"_blank\" rel=\"nofollow\">recorded<\/a> about $38 billion in inflows in just the first half of 2025, showing strong interest in both assets but from different starting points.<\/p>\n<p>Regulatory clarity has reinforced the trend. In the U.S., new legislation has confirmed Bitcoin\u2019s position as a recognized asset class, giving institutions stronger grounds for participation.\u00a0<\/p>\n<p>Bitcoin\u2019s price swings have eased in recent years. In August 2025, it was about 2.2 times as volatile as gold, compared with more than four times in earlier periods.\u00a0<\/p>\n<p>Analysts note a steady decline, with JPMorgan <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.fxstreet.com\/cryptocurrencies\/news\/bitcoins-declining-volatility-could-make-it-more-attractive-to-institutional-investors-jpmorgan-202508290103\" target=\"_blank\" rel=\"nofollow\">reporting<\/a> that Bitcoin\u2019s annualized rolling volatility dropped from nearly 60% at the start of the year to around 30%, the lowest level on record.<\/p>\n<p>Taken together, the rise of both assets reflect that the U.S. dollar\u2019s long-standing dominance is slipping, and the balance of global reserves is starting to tilt toward a more divided system.<\/p>\n<\/p><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Global reserves are undergoing a dramatic realignment as gold climbs to a thirty-year high, Bitcoin ETFs expand rapidly, and the U.S. dollar slides back to levels last seen in the&hellip;<\/p>\n","protected":false},"author":1,"featured_media":953,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-9454","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/9454","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/comments?post=9454"}],"version-history":[{"count":1,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/9454\/revisions"}],"predecessor-version":[{"id":9455,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/9454\/revisions\/9455"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media\/953"}],"wp:attachment":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media?parent=9454"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/categories?post=9454"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/tags?post=9454"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}