Bitcoin on the Verge of Surge, Says Arthur Hayes, Citing Inflation Risks

In a recent blog post titled “The Periphery,” former BitMEX CEO Arthur Hayes has stirred the cryptocurrency world by suggesting that Bitcoin (BTC) is on the brink of a major price surge. Hayes argues that the cryptocurrency is sending clear signals about an impending “global wartime inflation,” which, he believes, could send Bitcoin’s price soaring to new highs. This bold prediction is based on an intricate interplay of factors involving inflation, global conflicts, and financial market dynamics.

The Safe Haven in Times of Uncertainty

Hayes begins his argument by pointing to the geopolitical landscape, particularly the United States’ involvement in two new wars. According to him, this increases the risk of an escalation of global conflicts. Simultaneously, the U.S. Federal Reserve is grappling with persistent inflation but has halted interest rate hikes, leaving the economy in what he calls a “bear steepener” phase.

“The structural hedging needs of banks and the borrowing needs of the US war machine reflexively feed on one another in the US Treasury market,” Hayes writes in his blog post. He suggests that this complex interaction is creating an environment where long-term U.S. Treasury bonds no longer offer safety for investors, prompting them to seek alternative assets like gold and, most importantly, Bitcoin.

The recent price movement of Bitcoin seems to confirm Hayes’s thesis. BTC has surged by 20% in a week, a significant uptick that followed the U.S. President Joe Biden’s address to the nation regarding the wars in Ukraine and Israel. “Directly after the Biden speech, Bitcoin – along with gold – is rallying against a backdrop of an aggressive selloff in long-end US Treasuries,” Hayes notes.

He emphasizes that this is not mere speculation but rather Bitcoin’s response to the anticipation of a future, highly inflationary global situation due to potential wars. He added, “This isn’t speculation as to an ETF being approved – this is Bitcoin discounting a future, very inflationary global world war situation.”

Bitcoin’s Rally in the Face of Global Tensions

Hayes posits that the path to a Bitcoin rally lies in a concept called “yield curve control” (YCC), a mechanism that allows central banks to control the yield on government bonds. This policy has already been implemented in Japan and may become more prevalent globally. “And the end game, when yields get too high, is for the Fed to end all pretence that the US Treasury market is a free market. Rather, it will become what it truly is: a Potemkin village where the Fed fixes the level of interest at politically expedient levels,” Hayes explains.

According to “The Periphery,” the realization of this policy and its implications will set the stage for a substantial bull market in Bitcoin and other cryptocurrencies. Hayes believes this moment is the trigger that will usher in the next phase of cryptocurrency adoption and urges investors to consider shifting their assets from short-term U.S. Treasury bills into the world of crypto.

Arthur Hayes has gained a reputation for his predictions about post-COVID-19 global economics and the subsequent inflationary era. His insights into the crypto market have been closely watched by investors and traders in the cryptocurrency space. As the crypto community watches Bitcoin’s price movements closely and considers the broader implications of Hayes’s assertions, the market seems poised for a potentially transformative period driven by global economic forces and the evolving financial landscape.