In short: BitMEX co-founder Arthur Hayes predicts that Bitcoin's price and inflation will rise in parallel as the Federal Reserve's hawkish policy leads to an acceleration of inflation. Hayes believes that the US government's increasing debt-to-GDP ratio will cause traditional economic laws to break down and drive a general exit from the fiat monetary financial system. Regardless of whether the Fed hikes or cuts rates, it will result in the acceleration of inflation, he says. Despite this, Hayes suggests that Bitcoin investors remain patient until economic conditions are in place for the cryptocurrency's price to skyrocket.
Our quick analysis:
As the Federal Reserve considers whether or not to raise interest rates next month, Bitcoin investors can breathe a sigh of relief. According to BitMEX co-founder Arthur Hayes, Bitcoin's price and inflation will actually rise due to hawkish central bank policy, in contrast to modern monetary theory.
In his recent blog post titled "Patience is Beautiful," Hayes explains why traditional economic "laws" will break down due to the expanding debt-to-GDP ratio of the economy. Despite the prevailing idea that rising interest rates lead to a decrease in the money supply and inflation, Hayes predicts the opposite will occur.
The US government's $31.8 trillion debt, far exceeding the $26.4 trillion GDP and $4.6 trillion yearly tax revenue, is cause for concern. President Joe Biden and House Speaker Kevin McCarthy recently presented a draft bill to avert an incoming debt crisis. However, Hayes predicts the debt ceiling will be lifted this summer, resulting in the issuance of trillions of dollars worth of debt by the US Treasury, which will drive up interest rates on short-term government debt.
As a result, bank depositors will withdraw their holdings, leading to the need for the Federal Reserve to cut rates. This will make banks profitable again, but at the cost of inflation spiking. On the other hand, if the Fed continues to raise rates, there will be more bank failures, leading to more money printing by the Federal Deposit Insurance Corporation, and therefore more inflation.
Despite these potential challenges, Hayes predicts that Bitcoin will hold firm in the short term, with a bull market likely to begin in the later part of this year. The "wealth" printed by the government and given out as interest will benefit not only Bitcoin but also gold, AI tech stocks, and other assets.
Hayes advises investors to remain patient and to "chill the f**k out" until the fall, when a trading spaceship will be ready for take-off. While he doesn't believe that Bitcoin will hit a new all-time high of $70,000 by the end of the year, he predicts that 2024 will be a good year.
Hayes' opinion is supported by on-chain market analysis firm CryptoQuant, which reported in April that institutional investors are eyeing Bitcoin for later this year. They believe that a new all-time high could be reached by Q2 2024.
In conclusion, Bitcoin investors have little reason to fret over the Federal Reserve's interest rate decisions, as Arthur Hayes predicts that regardless of the Fed's actions, Bitcoin will thrive.
Image provided by Unsplash
Disclaimer: Our articles are NOT financial advice, and we are not financial advisors. Your investments are your own responsibility. Please do your own research and seek advice from a licensed financial advisor beforehand if needed.
Our quick analysis:
As the Federal Reserve considers whether or not to raise interest rates next month, Bitcoin investors can breathe a sigh of relief. According to BitMEX co-founder Arthur Hayes, Bitcoin's price and inflation will actually rise due to hawkish central bank policy, in contrast to modern monetary theory.
In his recent blog post titled "Patience is Beautiful," Hayes explains why traditional economic "laws" will break down due to the expanding debt-to-GDP ratio of the economy. Despite the prevailing idea that rising interest rates lead to a decrease in the money supply and inflation, Hayes predicts the opposite will occur.
The US government's $31.8 trillion debt, far exceeding the $26.4 trillion GDP and $4.6 trillion yearly tax revenue, is cause for concern. President Joe Biden and House Speaker Kevin McCarthy recently presented a draft bill to avert an incoming debt crisis. However, Hayes predicts the debt ceiling will be lifted this summer, resulting in the issuance of trillions of dollars worth of debt by the US Treasury, which will drive up interest rates on short-term government debt.
As a result, bank depositors will withdraw their holdings, leading to the need for the Federal Reserve to cut rates. This will make banks profitable again, but at the cost of inflation spiking. On the other hand, if the Fed continues to raise rates, there will be more bank failures, leading to more money printing by the Federal Deposit Insurance Corporation, and therefore more inflation.
Despite these potential challenges, Hayes predicts that Bitcoin will hold firm in the short term, with a bull market likely to begin in the later part of this year. The "wealth" printed by the government and given out as interest will benefit not only Bitcoin but also gold, AI tech stocks, and other assets.
Hayes advises investors to remain patient and to "chill the f**k out" until the fall, when a trading spaceship will be ready for take-off. While he doesn't believe that Bitcoin will hit a new all-time high of $70,000 by the end of the year, he predicts that 2024 will be a good year.
Hayes' opinion is supported by on-chain market analysis firm CryptoQuant, which reported in April that institutional investors are eyeing Bitcoin for later this year. They believe that a new all-time high could be reached by Q2 2024.
In conclusion, Bitcoin investors have little reason to fret over the Federal Reserve's interest rate decisions, as Arthur Hayes predicts that regardless of the Fed's actions, Bitcoin will thrive.
Image provided by Unsplash
Disclaimer: Our articles are NOT financial advice, and we are not financial advisors. Your investments are your own responsibility. Please do your own research and seek advice from a licensed financial advisor beforehand if needed.
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