De-dollarization and the Psychology of Reserve Currency Denial
Every dominant reserve currency in history has eventually lost that status. The US dollar is not exempt from historical forces — and the denial psychology around this is one of the most expensive cognitive biases an investor can carry.
Every dominant reserve currency in recorded history has eventually been displaced. The Roman denarius, debased over centuries until it was worthless bronze. The Dutch guilder, dethroned when Amsterdam's commercial dominance gave way to British naval and financial power in the 18th century. The British pound, which held reserve status long past the point of British economic dominance — until Bretton Woods in 1944 made the math undeniable.
Each transition took decades. Each transition was "impossible" right up until it wasn't.
The US dollar has been the world's reserve currency since 1944. That's 82 years. It is not permanent.
The Denial Pattern Is Always the Same
Historical Pattern: Dominant reserve currencies don't lose status in crashes — they lose it in slow, grinding transitions that are easy to dismiss at each individual step. The British pound maintained partial reserve status for 30 years after the US became the dominant economic power. Denial at each step was rational in isolation. The aggregate outcome was a complete status transfer.
The arguments for dollar permanence follow a predictable script, and the script updates over time. In the 1970s: "the dollar is backed by US economic dominance." After the petrodollar system took hold: "the dollar is backed by oil." Post-financial crisis: "the dollar is backed by the depth of US Treasury markets." Each version of the argument is "backed by X" — and when X changes, a new X gets substituted.
This is status quo bias at civilizational scale. The current arrangement is familiar, the alternatives feel exotic, and the transition costs are real and visible while the long-term risks are abstract and distant.
The Signals Are Accumulating
I'm not a dollar collapse alarmist. I'm a pattern recognizer. And the pattern of de-dollarization signals is more coherent than most mainstream analysts are willing to acknowledge:
BRICS settlement currency discussions. The BRICS bloc — Brazil, Russia, India, China, South Africa, plus new members — represents roughly 40% of global GDP at purchasing power parity. Their ongoing discussions about a commodity-backed settlement currency or expanded bilateral trade in local currencies represent a structural challenge to dollar hegemony in the global south.
Saudi Arabia's yuan-denominated oil sales. The petrodollar system — in which oil is priced and settled in USD globally — was one of the foundational pillars of dollar reserve status after Nixon closed the gold window in 1971. Saudi Arabia's decision to begin accepting yuan for some oil sales to China is a crack in that foundation. Small now. The direction matters.
Central bank gold accumulation. Global central banks have been net buyers of gold at multi-decade highs for three consecutive years. This is the reserve diversification signal hiding in plain sight. Central banks don't accumulate gold for sentiment reasons — they do it to reduce concentration risk in existing reserve holdings.
The Timeline Is Decades, Not Years
Here's where I'll part ways with the doom-and-gloom crowd: de-dollarization is a multi-decade transition, not an imminent collapse. The dollar has structural advantages that don't evaporate quickly — the depth and liquidity of US Treasury markets, the legal infrastructure of dollar-denominated contracts, the network effects of global dollar clearing systems. These are real moats.
But "multi-decade transition" is exactly the kind of timeline that investors systematically under-weight. A risk that materializes over 20-30 years feels abstract when you're thinking in quarters. The investors who positioned for the British pound's decline during the 1930s looked early for a long time before they looked prescient.
The question isn't "is the dollar losing reserve status this year?" The question is "what does a portfolio look like that accounts for a 20-30% reduction in dollar reserve share over the next 20 years?"
The Bitcoin Angle Is Structural, Not Speculative
Bitcoin's fixed supply of 21 million coins is not a technical detail — it's a political statement about monetary policy.In a world where the reserve currency transition creates demand for a neutral, non-sovereign store of value, Bitcoin's properties become increasingly relevant: no central bank, no political jurisdiction, fixed supply schedule, 24/7 global settlement. Gold has served this function historically, but Bitcoin adds programmability, portability, and verifiability that physical gold can't match.
This isn't moon math. This is the structural thesis for why Bitcoin belongs in a diversified macro-aware portfolio alongside gold, commodity exposure, and non-dollar assets. Not as a speculation on price. As a hedge against the one risk that status quo bias makes the hardest to see.
Every reserve currency transition in history was eventually obvious in hindsight. The work is recognizing the pattern while the denial is still loud.
The denial is loud right now. That's data.
Get the Signal, Not the Noise
Weekly analysis on AI, crypto, and strategy — through the lens of the InDecision Framework. No hype. No filler. Just signal.
Subscribe Free →The Architecture of Deception: How Modern Geopolitics Exploits Cognitive Bias
State actors don't fight wars in the open anymore. They fight in the information space — and they're winning because they understand your cognitive biases better than you do.
Taiwan, Chips, and the Psychology of Strategic Ambiguity
The Taiwan situation is the most consequential geopolitical risk of the decade. Most people misread it as ideology. It's actually about who controls the foundational technology of the AI era.