BitMEX’s Arthur Hayes believes that fiat will implode, pushing Bitcoin up.
ATFX Global Markets reported a 30%-40% surge in yen shorts in the past week.
Most of the short positions were occupied by hedge funds and high net worth clients.
Arthur Hayes, the co-founder of the digital asset trading platform BitMEX, has predicted that the price of the world’s largest cryptocurrency by market capitalization, Bitcoin (BTC), will skyrocket if the fiat system implodes in the near future or “if more fiat liquidity chases assets with finite supplies.”
Hayes shared his thoughts on social media platform X (formerly Twitter), to discuss the scenario where the Bank of Japan (BOJ) and the United States Federal Reserve would not allow the US dollar and Japanese yen interest rate differential to narrow.
A lesson in Moral Hazard. If the BOJ and FED won’t allow the $-yen interest rate differential to narrow, the market will continue to pile on leverage. $BTC pumps if fiat system collapses or if more fiat liquidity chases assets with finite supplies. Yachtzee 😘😘😘 pic.twitter.com/cxG9vsrzjo
— Arthur Hayes (@CryptoHayes) August 16, 2024
Hayes referenced a Bloomberg report by David Finnerty and Ruth Carson which discussed how the popular yen-centered carry trade that exploded two weeks ago leading to the collapse of global markets, is making its comeback. The authors highlighted how the yen has declined 5% against the dollar since August 5, which has resulted in a surge in the short positions on yen.
Japanese broker firm Nomura confirmed a surge in investors borrowing yen to invest in higher-yielding assets. This indicates that key players in carry trading, including corporate clients and hedge funds, are shifting to higher-yielding options.
Australian forex broker ATFX Global Markets reported a 30%-40% surge in yen shorts in the past week and the majority of the positions were opened by hedge funds and high net worth clients. BOJ Governor Kazuo Ueda is due to speak on August 23 before the parliament, providing further clarity on the situation.
As per a Reuters report, Nathan Swami, Asia-Pacific head of foreign exchange trading at Citi in Singapore, said that the yen is currently more affected by US rates and the significant yield differential and not by the BOJ hiking policy rates in the short term. Swami believes that the BOJ will work towards normalizing the policy but what the Fed does in the meantime is crucial.
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