Source: Leverage Shares analysis

It bears noting that the REERs aren’t one-shop explainers of all things economic: these are to be taken in context. For instance: while India might show nearly similar levels of REER appreciation as the U.S., India’s biggest deficit-running trading partners are the Gulf Cooperation Council in the Middle East (who mostly supply oil), Russia (mostly oil, coal and gas) and ASEAN countries in Southeast Asia (mostly minerals and sundries). Given that China runs a deficit against India via the supply of goods such as electronics, et al, the rapidly-growing indigenous manufacturing sector – which never fully ceased to function despite cheap goods readily available next door – has been increasingly incentivized to produce goods locally to ameliorate this.

As the U.S. dollar grew increasingly disadvantaged in export competitiveness, its European and Asian counterparts grew stronger in their REERs relative to the U.S. Absent China and its pegged currency, the REER trajectory might be entirely different for both India and the U.S. But, unlike India, the American manufacturing sector is a shell of its former self. The high value of the U.S. dollar acts as an impediment to the restoration of its high status in a competitive and widely-distributed global marketplace.

While President Trump had proposed (or threatened) tariffs across the board for all its trading partners, the World Trade Organization – whose global rulebook was once acknowledged by the U.S. government itself¹ as having helped established American manufacturing’s dominance across the world – has already issued a caution that such plans are a „lose-lose“ proposition² for the United States and its economy. European thinktanks are already advising³ their governments to form economic coalitions that exclude the United States while mandating for continued commitment to the WTO rulebook.

Government spending has long lubricated select wheels/sectors of the U.S. economy. Regardless of the composition of the American legislature, successive administrations have relentlessly increased spending and it is somewhat unlikely that it would be any different in 2025. If President Trump were to follow his own recommendation⁴ made in 2023 and default on U.S. government debt obligations if spending cuts aren’t made, the consequences for the U.S. dollar are going to be manifold and complex.

As uncertainty clouds the U.S. dollar, Bitcoin’s valuation prospered. Its rising valuation and interest among investors – in turn – boosted Coinbase.

As of Q3 of 2024 (nine months or „9M“), stablecoins that are tethered to the U.S. dollars have witnessed a fairly significant drawdown from the highs experienced in 2023. Meanwhile, transaction revenues mostly driven by crypto trading are showing early trends of resurgence in contribution to the bottom line.