Arthur Hayes Says This Drives Crypto Rally – and It’s not ETFs

Amid the recent bull run, the talk of the town was that the institutional interest, i.e., the pending applications of Spot Bitcoin ETFs have been the cause. However, entrepreneur and former CEO and founder of crypto exchange BitMex, Arthur Hayes, has a different opinion. He broke down his macro-economic views in a recent article, highlighting that now is the time to move from bonds to Bitcoin (BTC).

False Tweet Sparks Genuine Excitement

After an incorrect tweet had caused a frenzy and led investors to wrongfully believe that a Spot Bitcoin ETF was approved, BlackRock CEO Larry Fink, fuelled the flames. He went on Fox Business to confirm that no application had yet been approved, but he had more to say.

Amid geopolitical concerns such as the current conflicts in Israel and the Ukraine as well as terrorism, people are turning to safe-haven assets like treasuries, gold, and crypto. Fink believes crypto could become a popular sanctuary during unstable periods.

The BlackRock CEO said, “And I believe crypto will play that type of role as a flight to quality.”

BitMex Founder Shares His Thoughts

As the U.S. becomes more involved in two new conflicts, Hayes sees a rising global escalation risk. Amid ongoing inflation, the U.S. Federal Reserve has paused interest rate increases, and the economy may face a “bear steepener.”

Hayes notes a mutual dependence between banks’ hedging requirements and the U.S.’s wartime borrowing in the Treasury market.

He added, “Gold nor Bitcoin yield anything. Therefore, if they are rallying while US Treasury yields spike, that tells me that both safe haven assets are discounting a future of more government spending and more inflation.”

Insight into Inflation and Yield Curve Control

Following Biden’s speech, Bitcoin and gold are rallying amid a significant selloff in long-end US Treasuries. According to Hayes, the surge in Bitcoin’s price isn’t due to ETF speculation but reflects the anticipation of an inflationary environment stemming from potential global conflicts.

Hayes, renowned for his post-COVID-19 economic forecasts, suggests that Bitcoin might reach a price of US$1 million (AU$1.58 million). This prediction is linked to the emerging phenomenon of yield curve control (YCC), an economic mechanism already evident in Japan.

He stated, “It’s time to start rotating out of short-term US Treasury bills and into crypto. The perfect setup is usually staring you right in the face, and you are just too preoccupied with the past to notice.”