CoinDesk reports:
BitMEX co-founder Arthur Hayes stated that historical economic trends indicate Bitcoin is destined to experience a significant surge again in this market cycle.
Despite Bitcoin trading mostly flat over the past few months, Hayes believes that this leading cryptocurrency asset will “regain its mojo,” attributing it to overwhelming government spending and money printing in modern-day America.
Epochs of Inflation
The popular cryptocurrency pundit divides economic history into two fundamental periods: epochs of local inflation and global deflation. He claims that since 2008, the United States has been immersed in the latter, following its turn to quantitative easing to quell the financial crisis.
Hayes explained, “During an epoch of local inflation, authorities suppress savers financially to fund past and present wars.” “During a globalized epoch, financial deregulation promotes global trade.”
Hayes remarked that generally, holding gold is wise during local inflation periods, especially when confidence in the “system” and those who manage it diminishes.
However, the genesis block of Bitcoin in 2009 also marked the beginning of the current economic era, introducing a currency that improves upon all qualities of gold. This currency is not only limited in supply but also moves “at the speed of light” like digital fiat currencies. He stated, “That’s why Bitcoin has stolen some of gold’s thunder from 2009 until now.”
Arthur Hayes attributes much of the credit for economic recession
Despite the Federal Reserve raising rates and shrinking its balance sheet over the past two years, Hayes asserts that credit volume in the economy continues to expand through other means. These measures counteract central bank anti-inflation efforts and continue to drive up the value of Bitcoin and other assets.
He elaborated, “You must now obsessively watch the volume of credit created by commercial banks.” This credit is largely facilitated through fiscal deficits, which are serviced by commercial banks “responsibly buying” government debt.
Hayes referenced the latest updates from the Congressional Budget Office, projecting a budget deficit of $1.915 trillion for the fiscal year 2024, the highest level since the COVID-19 era. Meanwhile, the Atlanta Fed anticipates a 2.7% real GDP growth rate for the third quarter of 2024, alleviating concerns of imminent recession.
Hayes concluded, “I point this out because I believe fiscal and monetary conditions are loose and will remain so, making the use of cryptocurrencies the best way to safeguard wealth.”