Arthur Hayes Says Japan’s Stimulus Could Send Bitcoin to $1 Million

Arthur Hayes, the co-founder of crypto exchange BitMEX, has predicted Bitcoin will surge to US$1 million (AU$1.5m) following comments from Japan’s newly elected Prime Minister, Sanae Takaichi, that her government is currently developing a large economic stimulus package.

The details of the stimulus package haven’t yet been announced, but Reuters reported yesterday that Japanese Government sources familiar with the plan say it’s likely to exceed US$92 billion (AU$141b) in size.

Reacting to the news, Hayes posted a screenshot of a summary of Japan’s planned stimulus measures to his X account on October 22 and gave his interpretation of the plan’s impact.

The stimulus package will reportedly be designed to combat inflation and ease cost pressures on households and businesses, likely including subsidies for energy costs, grants for regional areas, and incentives for businesses to increase wages and capital investment.

Hayes’ prediction that Bitcoin will soar to US$1 million is based on his belief that the Japanese government will need to issue bonds to increase the money supply to pay for the stimulus package — a move often referred to as quantitative easing or ‘money-printing’. Generally, when money supply increases like this, risk-on assets such as Bitcoin tend to go up in value.

Currently, Japan’s central bank, the Bank of Japan (BOJ), is engaged in quantitative tightening (restricting money supply) and has said it has no plans to change its approach until it’s able to bring inflation below 2%. The high costs of this new stimulus plan may force the Japanese economy into a quantitative easing phase.

Related: Japan May Let Banks Hold Bitcoin in Landmark Financial Reform

Next Bear Market to be Driven by Macro Downturn, Says Analyst

While Hayes predicts Bitcoin will surge to US$1 million, crypto analyst Willy Woo is less certain about how Bitcoin will behave if economic turmoil deepens. He warned that the next bear market could be driven by a cycle many people have forgotten about. 

Posting on X earlier this week, Woo said most people look to the M2 cycle (a measure of global money supply) and the Bitcoin halving cycle to predict crypto market phases. However, Woo suggests the upcoming bear market could be driven by another cycle, the macro business cycle — or in other words, a recession. 

“Next bear IMO will be defined by another cycle people forget about, the business cycle,” Woo said.

A survey of global executives by consulting firm McKinsey in September found that 7 in 10 respondents see a global recession scenario as increasingly likely through 2026. 

Related: Bitcoin Flows to Wall Street as Retail Speculation Dries Up in Post-Selloff Slump

Crypto markets have never experienced a prolonged macro business cycle downturn — the last happened in 2008 before Bitcoin was launched (not counting a brief pandemic-driven downturn). Woo believes an economic downturn will present a real test for Bitcoin and nobody really knows how it might behave.