Markets
Arthur Hayes predicts imminent bull run for Bitcoin as G7 central banks begin to ease policy
Co-founder of BitMEX Arthur Hayes believes that recent policy changes by global central banks herald the start of a significant bull market for Bitcoin and altcoins with high potential.
In his latest blog post, “Group of fools,“Hayes explained how these monetary policy changes create fertile ground for the crypto market to grow.
Hayes highlighted recent rate cuts from the Bank of Canada (BOC) and the European Central Bank (ECB) as pivotal moments. The moves mark the first time in years that G7 countries have cut their benchmark interest rates.
According to Hayes, this change will inject new energy into the crypto market. He said:
“The trend is unmistakable. Central banks are starting to ease their monetary policies. Now is the time to invest heavily in Bitcoin and altcoins.
Easing by central banks
At the center of Hayes’ criticism is the G7’s handling of the Japanese yen, which he says is flawed.
Hayes previously suggested that the US Federal Reserve (Fed) should exchange unlimited quantities of newly printed dollars with the Bank of Japan (BOJ) for yen. He said the move would give Japan’s Finance Ministry unlimited dollar resources to buy yen on global foreign exchange markets, thereby strengthening the yen.
He noted, however, that the G7’s current strategy appears to be aimed at convincing markets that the interest rate gap will narrow over time, which he believes will lead to buying yen and selling yen. other currencies.
The heart of Hayes’ argument lies in the disparity between the BoJ’s policy rate of 0.1% and the 4-5% rates of other G7 central banks. He argues that this differential fundamentally determines exchange rates.
He further explained that during the pandemic, central banks around the world provided cheap money to counteract economic downturns, but rising inflation forced all banks except the BOJ, to raise rates aggressively. The BoJ’s inability to raise rates stems from its massive holdings of Japanese government bonds (JGB). A rate hike would cause JGB prices to fall, leading to significant losses for the central bank.
Hayes stressed that cutting interest rates to reduce the interest rate differential is the only viable option left in the G7, even if inflation remains above the target levels of most of these central banks.
Hayes said the recent rate cuts from the BOC and ECB are strange, given that inflation in both regions remains above their 2% target. He speculated that the cuts could be a coordinated effort to manage the value of the yen and prevent a potential devaluation of the Chinese yuan, which could destabilize the global financial system.
Looking ahead, Hayes expressed doubts that the Fed will be able to cut rates in the run-up to the U.S. presidential election, despite stock market speculation. He predicted that the Fed and BoJ would likely maintain their current policies at their upcoming meetings, with a potential surprise rate cut from the Bank of England (BOE) following the G7 summit.
Hayes concluded that the recent rate cuts signal the start of an easing cycle that he believes will reinvigorate the crypto market.
New heights
Hayes sees these conditions as a catalyst for the crypto market. He indicated that he is shifting his own investments from stablecoins to “high-conviction shitcoins,” although he plans to reveal specific tokens only after securing his positions.
He also urged projects in his Maelstrom wallet to proceed with token launches without delay.
Reflecting on historical trends, Hayes noted that traditional stocks and Bitcoin have historically risen during periods of low interest rates.
He highlighted Bitcoin’s dramatic rise from less than $4,000 to $64,000 between March 2020 and April 2021, following the federal government’s drastic rate cut to 0.25%.