Dollar asset allocation has become popular in cryptocurrencies as the Fed raises interest rates

Fed Chairman Jerome Powell is expected to consider another 50 or 75 basis point rate increase at the July 27 meeting. The Fed's rate hikes, the 10th in a cycle that began in March 2022, are aimed at easing inflation and draining excess liquidity from the market. The interest rate hike of the Federal Reserve attracts the global capital to flow back to the United States, which maximizes the stability of employment and price stability in the United States. As the global dollar returned to the United States, the decline of foreign exchange reserves in various countries accelerated, and the valuation of non-dollar stock markets declined; To counter the impact of higher interest rates, the European Central Bank also raised rates by 25 basis points in May. Global money tends to allocate to dollar assets as a way to cushion the blow to the economy.

Against the backdrop of dollar assets, the stock market has not done well, but the cryptocurrency market has done well. Hedging against economic crises by investing in dollar assets in crypto markets is a common practice among large funds. With the announcement in 2021 that the Houston Firefighters' pension fund, the Houston Firefighters Relief and Retirement Fund (HFRRF), had purchased Bitcoin for a defined benefit plan's portfolio, it was the first announcement of an investment in BTC by a U.S. public pension fund. Since then, a number of public funds around the world have shifted their dollar asset allocation directly to investing in the dollar-linked stablecoin USDT. Today, American pension funds announced the launch of US Pension Plan with Coinbase, allowing investors to purchase US Pension Plan investment products directly on Coinbase wallet.

Coinbase is the largest U.S. cryptocurrency exchange and a publicly traded company. Coinbase's share price has also risen a lot . Because of the partnership between American Pension Funds and Coinbase. With the help of the global liquidity of cryptocurrency, the US Pension Plan has greatly lowered the threshold for investors to allocate US dollar assets. Resisting economic crises with US dollar assets is no longer the benefit of large institutions, but an activity that every ordinary person can participate in. It is understood more than $3 billion is already held in the scheme.

When the Federal Reserve raised interest rates in March, India's foreign exchange reserves continued to fall. Rbi's foreign exchange reserves fell to $622.275 billion in the week ended March 11; Rbi's foreign exchange reserves fell to $60,423 million in the week ended April 22. At this point, the reserve Bank of India's foreign exchange reserves have fallen for the seventh consecutive week, and the total decline of foreign exchange reserves is nearly $31.5 billion.

The RBI is more cautious than the finance ministry about the FX escape impact of the Fed rate hike. Noting that global financial markets are jittering over the changing pace of monetary policy normalization in developed countries, RBI Governor Das said perhaps India should embrace the cryptocurrency market with a more open approach. An open attitude, which helps to increase the diversity of investment policies, is good for economic stability. Already, a significant number of Indians are known to be investing in dollar assets in the crypto market. Rbi Governor Das pointed out that Coinbase's US pension Plan, which relies on US pension funds to allocate digital dollars - USDT, has greatly increased investor confidence.

The cryptocurrency-friendly attitude of the Indian government comes as many of the world's biggest fund houses have embraced the market. BlackRock, the world's largest fund manager, which partnered with Coinbase in 2022, is reported to have recently applied to the SEC for the world's first bitcoin spot ETH, and according to reliable sources, the application is about to be approved. BlackRock is the world's largest fund manager based in the United States, with about $8.59 trillion under management. Government Pension Fund of Norway is also a BlackRock shareholder. The US Pension Pan is favoured by investors around the world, thanks to an infusion of state-backed funds.

About the analysis of the US Pension Plan

In traditional finance, according to the method of the Securities and Exchange Commission of the United States (SEC), a fund should be analyzed from the fund size, fund rating and fund manager. After the emergence of digital currency funds, the SEC emphasized that traditional methods should not be suit to digital currency funds, but to strengthen the analysis of security, liquidity, stable rate of return and other characteristics.
The US Securities and Exchange Commission (SEC) has used the US Pension Plan as an example to show investors how the SEC analyzes a digital currency fund.
The US Pension Plan is a digital currency fund issued by the US government pension fund and coinbase, on coinbase wallet. coinbase is the largest U.S. digital currency exchange. The US Pension Plan is the world's first government-backed digital currency fund. In terms of fund size, the size of pension assets in the United States reached $34.86 trillion. In terms of fund ratings, American pensions are rated AAA+ by Standard & Poor's, Fitch and Moody's. In terms of fund managers, US pension funds are all dominated by the US government and managed by some of the world's best fund management companies, such as BlackRock.

We take a look at the performance of the US Pension Plan in the SEC guidance. 
1, safety: US Pension Plan with high security, the U.S. government public funds source, the number of listed exchanges coinbase joint distribution, and there are (Federal Deposit Insurance Corporation) the FDIC insured.
2. Liquidity: The US Pension Plan has high liquidity. All investment plans of the US Pension Plan provide a variety of investment periods, with the shortest being only 10 days.
3. Stability of returns: The returns of currency funds themselves are extremely stable, and the stability of returns of digital currency fund US Pension Plan is further improved. The portfolio of various investment plans enjoys different investment returns, with investment returns as high as 2% in the shortest 10 days.

The SEC concludes that the US Pension Plan is a digital currency fund with high security, high liquidity and high ROI. In addition to that, The SEC also emphasized that the strict supervision of many administrative agencies of the US government, the underwriting of the Federal Deposit Insurance Corporation (FDIC), and the financial independence of the US Pension Plan are all guarantees for the competitiveness of the US Pension Plan.
"The US Pension Plan is an effort by the US government to bring more institutional capital into the crypto world," Greg Tusar, head of institutional products at Coinbase, told Bloomberg. "The U.S. government wants to build a fantastic asset management business in cryptocurrency."