tmex founder Arthur Hayes predicts that China's aggressive monetary easing could trigger a historic Bitcoin market, as the expansion of RMB indirectly drives demand for cryptocurrencies.
Is a Bitcoin boom coming? Arthur Hayes comments on China's quantitative easing policy
Arthur Hayes, founder and former CEO of Bitmex, published a blog post on Monday predicting that China's quantitative easing measures could trigger a sharp Bitcoin market. Hayes believes that China's massive monetary intervention, aimed at reviving its banking and real estate sectors after a historic real estate collapse, will ultimately drive up Bitcoin prices.
He emphasizes that the value of Bitcoin increases as fiat currency devalues due to stimulus measures and government intervention, describing:
As long as fiat currency is created, Bitcoin will soar. Ultimately, it doesn't matter who the final recipients are.
Hayes explains that China's real estate crisis and the subsequent re-inflation policies laid the groundwork for unprecedented credit expansion, which he predicts will indirectly flow into the Bitcoin market.
"This means that when China revives its banking system and real estate sector, Bitcoin will soar on a long-term basis," he wrote. "Given that China's real estate bubble is the largest in human history, the amount of RMB credit created will be comparable to the total amount of dollars printed by the US in response to COVID in 2020-2021." Regarding the expectation of this massive expansion of fiat currency, Hayes commented:
This warning may motivate investors to choose Bitcoin as a store of value instead of stocks or real estate.
Despite the Chinese government's crackdown on Bitcoin exchanges, Hayes points out, "While exchanges are prohibited from offering visible Bitcoin/CNY trading pairs, Bitcoin and cryptocurrencies are still thriving in China." The former Bitmex executive added, "Given that the Chinese government knows it cannot ban Bitcoin, and that holding Bitcoin and cryptocurrencies is not prohibited in China (contrary to some misleading financial media reports), Beijing prefers to keep them out of sight and out of mind."
With his firm belief that Bitcoin performs best during currency devaluation waves, Hayes concluded:
No major high-risk asset class can outperform Bitcoin during currency devaluation. Investors instinctively know this, and when it comes to considering how to protect the purchasing power of savings, Bitcoin will appear before you like Kwisatz Haderach.
He remains cautious about short-term price increases, warning that "the PBOC's quantitative easing and the resumption of bank credit growth will take time. Just like chemotherapy takes time to eliminate the disease." However, he foresees long-term increases in Bitcoin, predicting that "when the wealthy Zhou on the coast decides they must own Bitcoin at any RMB price, the price fluctuations will be reminiscent of August 2015, when Bitcoin surged from $135 to $600 in less than three months after the PBOC suddenly devalued the RMB."
