China and Russia have begun settling some energy transactions using Bitcoin as part of broader efforts to reduce dependency on the U.S. dollar, according to a senior executive at investment management firm VanEck. The development signals a potential shift in how countries conduct international trade amid growing economic tensions.
What to Know:
- China and Russia are using Bitcoin to settle energy trades, according to VanEck research
- Other nations including Bolivia are exploring cryptocurrency for international transactions
- Analysts suggest dollar weakness historically correlates with Bitcoin strength
Matthew Sigel, Head of Digital Assets Research at VanEck, confirmed the development in a company blog post.
"China and Russia have reportedly begun settling some energy transactions in Bitcoin and other digital assets," Sigel wrote, highlighting what appears to be a growing movement among nations seeking alternatives to dollar-denominated trade.
These two economic powers aren't acting in isolation. Bolivia has announced plans to import electricity using cryptocurrency, according to Sigel's report. Additionally, French energy utility EDF is investigating potential Bitcoin mining operations that would utilize surplus electricity capacity.
"These are early signs that Bitcoin is evolving from a speculative asset into a functional monetary tool," Sigel noted, "particularly in economies looking to bypass the dollar and reduce exposure to US-led financial systems."
The shift comes amid escalating trade tensions under the current administration. Financial analysts are closely monitoring how these geopolitical realignments might impact both traditional currency markets and digital assets. Sigel advised investors to monitor Federal Reserve policy developments, noting that "dovish shifts in rate expectations and rising liquidity are historically positive for Bitcoin."
Dollar Weakness and Cryptocurrency Markets
Market indicators suggest the dollar's position may already be weakening. The U.S. Dollar Index (DXY), which measures the greenback against six major currencies, has declined more than 7% since January and currently stands at 102.5, according to trading data.
This trend could benefit Bitcoin and other cryptocurrencies, according to multiple industry experts. Matt Hougan, chief investment officer at Bitwise, wrote in a separate analysis that the administration "wants a weaker dollar, even if it means ending its role as the world's reserve currency." He emphasized that dollar weakness historically correlates with Bitcoin strength.
Hougan further suggested that the global financial system may be moving away from a single reserve currency toward "a more fractured reserve system, with hard money like Bitcoin and gold playing a bigger role than it does today." This assessment aligns with technical analysis from market watchers who have identified potential bearish continuation patterns in dollar trading charts.
The current political climate appears to be accelerating existing de-dollarization trends. Jane Foley, head of forex strategy at Rabobank, told Reuters in late March that "Trump's trade and foreign policies have forced Europe on a path toward reduced reliance on the US, and this is likely to imply a desire for reduced reliance on the dollar."
In what some see as a paradoxical development, Foley noted that "Trump threatened countries that tried to de-dollarise with extra tariffs. Ironically, his isolationist policies may drive the trend." This observation highlights the complex interplay between policy decisions and market reactions.
Several technical analysts have pointed to chart patterns suggesting further dollar weakness ahead. One market observer noted on social media that the Dollar Index "continues to fall steeply and is not far away from breaking down from this triangular bearish continuation pattern," predicting positive implications for cryptocurrency markets.
Closing Thoughts
The reported use of Bitcoin for energy transactions between major economies represents a significant development in the cryptocurrency's evolution from speculative asset to practical financial tool. As geopolitical tensions continue and more countries seek alternatives to dollar-denominated trade, Bitcoin's role in international commerce could expand further, potentially reshaping aspects of the global financial system.