Former BitMEX CEO Arthur Hayes explained how Donald Trump’s economic policies will trigger the collapse of the dollar. He also expressed his views on how politics and financial markets interact in his article. While this is bad for the dollar, it is possible that it will blow up the Bitcoin price. Hayes predicts that crypto money will reach a utopian price in an environment where the dollar loses value.
‘Credit expansion will increase the price of Bitcoin!’
The US has been struggling with an increasing debt/GDP ratio for decades. In 2008, $ 4 trillion in loans were needed to reduce this ratio from 132% to 115%. According to the former BitMEX CEO, $10.5 trillion in new loans would be needed to bring this ratio down to 70%, the same as in 2008. This massive credit expansion could lead to major changes in asset prices, especially for Bitcoin.
Hayes claims that there is a good reason for the bullish trend after Trump’s victory. He also cites Trump’s quantitative easing (QE) policies. QE refers to a monetary policy in which a central bank buys a certain amount of government bonds to stimulate the economy by increasing available cash. When central banks inject liquidity, investors often seek higher returns on alternative assets. This is likely to lead to an increase in the Bitcoin price.
The superiority of the leading cryptocurrency over fiat money: Its supply is stable!
As you know from Kriptokoin.com, Bitcoin stands in the opposite position to fiat currencies with its fixed supply. This makes it a popular hedge against inflation. Hayes says that with every dollar the US injects into the economy, Bitcoin becomes an even more attractive option. Hayes also notes that with fewer cryptocurrencies available, even small increases in demand will push prices up significantly. As more fiat money enters the economy, demand for fixed-supply assets increases.
Arthur Hayes: In this case, Bitcoin would probably reach $1 million!
This debt-driven model reflects elements of China’s approach to economic growth. For years, China has adopted a mix of state intervention and state-led capitalism. Hayes calls this approach in the US ‘American Capitalism with Chinese Characteristics’. It is possible that the US could follow a similar model. It could use debt-financed spending as a permanent economic tool.
Hayes urges the 47th President to emulate China’s economic development model. This, he says, would boost economic growth in the US by increasing the money supply. This strategy creates a perpetual cycle. Because more debt means more inflation. This increases the demand for assets such as Bitcoin. Arthur Hayes predicts that this cycle will push the Bitcoin price upwards, possibly to $ 1 million. In this context, Hayes makes the following suggestion:
As the circulating supply of Bitcoin dwindles, a large amount of fiat money around the world will compete for safe-haven assets, not only from the US, but also from investors in China, Japan and Western Europe. Buy and hold for the long term.
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