25 October 2023
Arthur Hayes, the former CEO of BitMEX, a prominent cryptocurrency exchange, has recently shared his viewpoint, signaling a watershed moment for Bitcoin (BTC).
With a world grappling with heightened geopolitical tensions and economic uncertainties, Hayes has delved into how these macro factors can impact the trajectory of Bitcoin. His recent blog post, “The Periphery,” casts light on the potential future Bitcoin is hinting at.
Wartime Economics And Bitcoin’s Rise
Hayes underscores the geopolitical risks posed by the United States’ growing involvement in two new wars. According to the former CEO of BitMEX, the ripple effects of such escalations could have vast implications for the global economy.
Tying this to the domestic financial scene, Hayes points out the notable halt in interest rate hikes by the United States Federal Reserve despite the looming inflation. Hayes identifies this as a possible “bear steepener” for the economy when long-term interest rates increase faster than short-term interest rates.
Hayes further elucidates the intricate relationship between banks’ structural hedging needs and the borrowing necessities of the US war machine, which are both interlinked in the US Treasury market.
The former CEO poses a thought-provoking argument: if long-term US Treasury bonds don’t offer the security investors traditionally expect, where will the money flow? Hayes further postulates that assets like gold, and more pivotally, Bitcoin, would surge, driven by genuine fears of “global wartime inflation.”
Bitcoin Response To Geopolitical Instabilities
Hayes observes that gold and Bitcoin are witnessing an upward momentum, contrasting with a pronounced selloff in “long-end US Treasuries.”
The former CEO of BitMEX stresses that this movement isn’t a speculative response to potential spot Exchange-Traded Fund (ETF) approvals. Instead, Bitcoin is a “barometer,” indicating an imminent “inflationary global wartime situation.”
One of the culminating points Hayes touches upon in “The Periphery” is the possible eventuality where the Federal Reserve would no longer mask the true nature of the US Treasury market.
According to Hayes, instead of portraying it as a free market, it would reveal its genuine form: a “Potemkin village” where the Federal Reserve sets interest levels based on political convenience.
As revealed by Hayes, this epiphany would be a pivotal moment, propelling Bitcoin and the broader crypto market into a full-fledged bull phase. The former CEO of BitMEX further concludes: “This is the trigger,” suggesting a strategic pivot from short-term US Treasury bills towards cryptocurrency.
When Hayes published “The Periphery,” Bitcoin continued to move in a bullish trend. The asset is up 2.6% in the past 24 hours and more than 20% in the past week. BTC is trading for $34,890 at the time of writing.
Featured image from iStock, Chart from TradingView