In a thought-provoking analysis titled “Black or White,” former BitMEX CEO Arthur Hayes delves into the potential economic shifts under Donald Trump’s anticipated policies. Hayes articulates how these policies could lead to a depreciation of the US dollar. He outlines the intricate interplay between political decisions and financial markets, predicting a significant downturn for the USD. This forecast, while concerning for the dollar, opens up promising possibilities for Bitcoin, with Hayes projecting the cryptocurrency could soar to a staggering $1 million as the dollar weakens.
Credit Expansion Could Boost BTC Price
The United States has been grappling with an escalating debt-to-GDP ratio for many years. A historical perspective reveals that in 2008, it required a $4 trillion credit infusion to bring this ratio down from 132% to 115%. According to Hayes, achieving a further reduction to 70%—a level seen in 2008—could necessitate an infusion of $10.5 trillion in new credit. Such an extensive credit expansion is poised to trigger substantial shifts in asset prices, with Bitcoin standing out as a key beneficiary.
Hayes attributes the upward trajectory observed post-Trump’s victory to the administration’s quantitative easing (QE) policies. QE, a monetary strategy where central banks acquire government bonds to boost liquidity, often propels investors towards alternative, higher-return assets. This shift invariably benefits Bitcoin, given its limited supply and role as a hedge against inflation. Hayes asserts that each dollar introduced into the economy enhances Bitcoin’s appeal as a viable investment.
With Bitcoin’s restricted supply, even minor demand upticks can significantly elevate prices. As more fiat currency permeates the economy, the allure of assets with fixed supplies intensifies, driving demand further.
Hayes Cites China’s Economic Model To Accelerate US Growth
Drawing parallels to China’s economic strategy, Hayes highlights how a debt-driven model could accelerate US growth. China’s blend of state-directed capitalism and substantial government intervention serves as a template. Hayes dubs this potential US approach “American Capitalism with Chinese Characteristics,” suggesting the US could adopt debt-funded spending as a long-term economic stimulus tool.
Hayes advocates for the forthcoming 47th president to consider China’s economic framework, positing that it could enhance the money supply and catalyze US economic expansion. This approach initiates a continuous cycle: increased debt leads to heightened inflation, which in turn fuels demand for assets like Bitcoin. Hayes envisions this cycle propelling Bitcoin’s value upwards, potentially reaching $1 million per coin.
“As Bitcoin’s circulating supply diminishes, substantial fiat currency worldwide will vie for safe-haven assets, not only from the US but also from investors in China, Japan, and Western Europe. Buy and hold long-term,” Hayes advises.
Bitcoin Close To 90K
In an impressive surge, Bitcoin has neared the $90,000 mark within the past 24 hours, fueled by optimism surrounding Donald Trump’s electoral success and the expectation of crypto-friendly US policies. This surge has propelled Bitcoin past silver, making it the 8th largest asset globally with a market capitalization of $1.752 trillion, surpassing silver’s $1.726 trillion. Bitcoin’s ascent also places it ahead of major corporations such as Meta ($1.472 trillion), Tesla ($1.123 trillion), and Berkshire Hathaway ($1.007 trillion).
While Bitcoin garners significant attention, numerous altcoins are also experiencing remarkable growth, with some achieving up to threefold gains in the past week. The cryptocurrency market’s dynamic nature continues to captivate investors worldwide, underscoring its potential as a transformative financial frontier.
