The US dollar has lost its most valuable asset: bitcoins.
The currency is now worth just $US2.25, or 1.5 per cent of its value on Wednesday, according to data from CoinMarketCap.
It’s down a steep 23 per cent since March, when bitcoin’s value peaked at $US1,096.
Its drop has been aided by concerns over the financial health of China’s yuan.
According to data compiled by Bloomberg, China’s central bank has cut its benchmark interest rate from 1.25 per cent to 0.75 per cent for the first time in five years.
Bitcoin has surged in value since the start of the year, and the dollar has fallen to its lowest level since the depths of the 2008 financial crisis.
But the dollar’s weakness has made it difficult to trade dollars in the U.S. and other trading partners, including Britain.
With the US dollar still hovering around parity with gold, bitcoin has surged to a new record, according the price chart of the CoinDesk Bitcoin Price Index.
“Bitcoin is surging, and this has the potential to have a major impact on the dollar,” said David Ritter, chief executive of Bats Global Trading Services.
However, he said there’s a risk bitcoin could be the “missing link” in the future.
In the short term, it could be useful for those looking to trade gold.
But in the long term, as the price of bitcoin rises, bitcoin’s price will likely decline, Ritter said.
Ritter said the value of bitcoins is driven by the demand for digital currency.
It’s an asset that’s used to fund transactions.
Even though bitcoins are valued at less than the value held by gold, they’re still worth a lot.
The value of a bitcoin today is roughly double that of a gold bar.
A dollar-denominated bitcoin transaction costs roughly $0.01, or just over 0.2 per cent.
The value of bitcoin has climbed to $US20,000 by the end of last year, but Ritter says that’s a conservative estimate, and it could rise.
As a result, he’s not selling bitcoin in the near future, although he said he’s watching the price.
Some other coins with similar value to bitcoin include Ethereum, Litecoin, Ripple, and Dogecoin.
Bitcoin has been trading at more than $US100,000 per coin since January, according data compiled from CoinDesk.
For the past year, the value has steadily climbed.
It surpassed $US10,000 in July, and has more than doubled since then.
And while bitcoin’s ascent has had the potential of having a significant impact on U.K. trade, it’s also been aided and abetted by Chinese interest in the currency, Ritch said.
“The value is rising, but it’s not as high as it was,” he said.
“There’s a chance bitcoin could have a bigger impact in the longer term.”
This article was originally published on CNBC.com.