In his latest analysis titled ‘Black or White,’ former BitMEX CEO Arthur Hayes delves into the potential consequences of Donald Trump’s forthcoming economic policies. Hayes suggests these policies could lead to a significant depreciation of the US dollar. Such a scenario, while challenging for the dollar, might prove advantageous for Bitcoin, potentially driving its value to unprecedented heights.
Credit Expansion Could Boost Bitcoin Price
For several decades, the United States has been grappling with an ever-increasing debt-to-GDP ratio. To illustrate, in 2008, it required a staggering $4 trillion in credit to lower the ratio from 132% to 115%. According to Hayes, bringing this ratio down to 70%, reminiscent of the levels in 2008, could necessitate an infusion of $10.5 trillion in new credit. Such a massive credit expansion could trigger significant shifts in asset prices, notably benefiting Bitcoin.
Hayes attributes the positive market movements following Trump’s victory to his quantitative easing (QE) policies. QE, a monetary strategy where a central bank buys government bonds to inject liquidity into the economy, often prompts investors to seek higher returns in alternative assets like Bitcoin. The fixed supply of Bitcoin stands in stark contrast to fiat currencies, making it an attractive hedge against inflation. Hayes posits that as more dollars flood the economy, Bitcoin’s appeal strengthens.
With Bitcoin’s limited supply, even modest increases in demand can substantially elevate prices. As fiat money proliferates, the allure of assets with fixed supplies becomes more pronounced.
Hayes Advocates for Adopting China’s Economic Model to Spur US Growth
Hayes draws parallels between the US’s potential economic strategies and China’s model of state-directed capitalism, characterized by substantial government intervention. He refers to this approach as “American Capitalism with Chinese Characteristics.” By emulating such a model, the US could leverage debt-financed spending as a continuous economic lever.
Arthur Hayes urges the incoming 47th US president to take inspiration from China’s economic development strategy, which could bolster the money supply and accelerate economic growth. This strategy could create a self-sustaining cycle where more debt leads to increased inflation, in turn driving demand for assets like Bitcoin. Hayes envisions a future where this loop propels Bitcoin’s value potentially to $1 million per coin.
“As Bitcoin’s circulating supply diminishes, a considerable volume of fiat currency globally will compete to secure safe-haven assets. This trend will not just be limited to the US but will extend to investors in China, Japan, and Western Europe. Buy and hold for the long term,” Hayes emphasizes.
Bitcoin Approaches the $90,000 Mark
Bitcoin has witnessed a remarkable surge, nearing the $90,000 milestone within the past 24 hours. This growth is fueled by optimism surrounding Trump’s election victory and the anticipated crypto-friendly policies from the US government. Bitcoin has overtaken silver to become the eighth largest asset globally, with its market capitalization reaching $1.752 trillion, surpassing silver’s $1.726 trillion. It has also eclipsed major corporations like Meta, Tesla, and Berkshire Hathaway.
While Bitcoin remains the focal point, several altcoins have also demonstrated impressive growth, with some achieving up to threefold gains over the past week.
