Article reproduced from: Arthur Hayes
Translation | Wu Says Blockchain
In a recent interview on the podcast Alpha First, Arthur Hayes shared his bold prediction for the future of the cryptocurrency market. He believes that with the possible ascendance of the Trump administration, the loose monetary policy in the U.S. will lead to a devaluation of the dollar, subsequently driving up the prices of Bitcoin and other crypto assets. He also discussed global inflation, the monetary policies of sovereign nations, and how to benefit from Bitcoin and other crypto assets like memecoins. He emphasized that investors need to remain vigilant in a bull market to avoid overlooking market risks due to greed. Additionally, he looked ahead at future market trends and predicted that by 2025, Bitcoin could reach the milestone of $250,000.
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Listen to the full podcast (YouTube):
https://www.youtube.com/watch?v=xONEXGRcBMU
Trump's economic policies will lead to the devaluation of the dollar and benefit Bitcoin.
Dreamer: The election just ended a few weeks ago, and there have been many changes in market prices. What can we expect in the next 12 months? Do you have any visions to share with us? What should we pay attention to in the landscape of cryptocurrency predictions?
Arthur: From my perspective, the market's predictions are correct. They expect Trump and his new cabinet members to print a lot of money in the U.S. One of their campaign agendas is to attract manufacturing and industrial companies back to the U.S. through a weak dollar policy. Next, they will inject a large amount of money through bank credit, increasing the volume of credit in the U.S. economy to boost production and raise wage levels. All of these will lead to inflation.
The ultimate losers are those who save in dollars or hold government bonds. Those with fixed supply assets, like Bitcoin, will perform exceptionally well. We have already seen this trend, right?
So, I plotted some data comparing the total amount of bank credit in the U.S. with the performance of Bitcoin. Currently, Bitcoin is clearly leading. This indicates that if Trump comes to power, his plan is already very clear—devalue the dollar, stimulate the market with credit, and get people back to work to restore American production capacity. I believe he will execute this plan.
Will Bitcoin reach $1 million?
Scott: There's a follow-up question about Trump. You made a bold prediction that if Trump comes to power, Bitcoin will reach $1 million. Do you still think everything will unfold as expected? Are you still confident?
Arthur: I am confident, but I'm not sure if it will happen in the short term. In fact, this trend has started since Trump was elected president in 2016. At that time, he pushed for a trade war against China, and the Democratic Party and Biden administration continued this policy. So now, this confrontation has deeply penetrated American political culture.
In the past, the U.S. moved most of its manufacturing and production capacity to China and Asia, which gained a competitive advantage by weakening their currencies, impacting American workers in the process. Therefore, the U.S. must bring these industries back home. To achieve this, billions of dollars in credit need to be allocated to businesses to enable them to profit domestically.
Biden has passed measures such as the CHIPS Act, the Infrastructure Bill, and the Green New Deal, all of which require substantial funding support. This trend will continue.
Global economic policies will drive inflation up and benefit crypto assets.
Dreamer: People in the crypto space are usually the most disruptive group. There are many things worth discussing surrounding Trump. From a domestic perspective, your views make a lot of sense and make many people feel optimistic. But if we look internationally, how will the election affect foreign policy, war, and trade? For Asia, some policies may bring certain fears. Will these policies negatively impact the economy or cryptocurrency? Or should we not worry too much?
Arthur: I think essentially every country is now pursuing a 'national priority' policy. The U.S. proposed 'America First,' while China hopes to bring prosperity back to its rural areas or low-income groups through the 'common prosperity' plan. Therefore, the Chinese government has suppressed the real estate bubble and is now stimulating the economy again through monetary easing.
Japan is experiencing capital repatriation, which will boost its economy, but it also needs more credit to prevent bank failures. Meanwhile, Europe is in trouble because it has cut off cheap energy from Russia and turned to expensive energy imports from the U.S. However, they still need to support business operations, so they will also implement stimulus policies.
So every country is working hard to care for its own citizens, which means restoring local industries and increasing demand for goods. This trend will drive inflation globally and further suppress the long-term outlook for bond yields.
In such an environment, cryptocurrencies will perform well. Although the policies of different countries seem different, they are actually all pursuing the same goal of prioritizing the needs of their own citizens. This requires an increase in the allocation of internal credit and an expansion of supply to support production and create jobs for people. This global trend is extremely beneficial for Bitcoin and other crypto assets.
Will the rise of Bitcoin drive other crypto assets?
Dreamer: It looks like this is a great opportunity for cryptocurrency, especially Bitcoin. But what about other cryptocurrencies? How do you see if they will be affected by Bitcoin's rise? Are you a Bitcoin maximalist who believes only Bitcoin has potential and that others won't follow? Or do you think other projects like Ethereum will have opportunities? For instance, NFTs, meme coins, and DeFi have had their ups and downs. Will these also benefit from the market's rise, or will it mainly focus on institutional investors, believing only Bitcoin will attract funds?
Arthur: I'm actually not too concerned about the moves of institutional investors because everyone always says they will enter the market, but they have their own complex investment logic and credit considerations; there are reasons for buying or not buying. From the perspective of retail investors, when the price of Bitcoin rises, everyone's most important asset is Bitcoin. When my wealth in Bitcoin increases, I don’t want to revert to fiat because it doesn't make sense, right? I also wouldn’t just invest in Bitcoin. I want to invest in other crypto assets that have larger growth potential than Bitcoin.
What else can be done? We will focus on meme coins, new Layer 1 blockchain projects, Layer 2 projects, NFTs, and the gaming sector, etc. Bitcoin leads the market, and then funds will gradually flow into other asset categories. Because ultimately, the goal is to earn more cryptocurrency rather than convert back to fiat. I believe fiat will eventually go to zero.
Scott: Yes, I think everyone will try to profit quickly and may even become somewhat addicted to this rapid growth. After all, this is one of the fastest-growing asset classes. If people profit from Bitcoin, many won't revert to fiat currency but will instead invest in other crypto assets that still have potential. You mentioned that the meme coins in this cycle surprised everyone, just like the NFTs in the previous cycle. I heard you hold some meme coins; is this part of the market interesting to you? How have meme coins performed in this cycle? Can they easily scale to billions of dollars?
Arthur: This is indeed interesting, and I love it. This phenomenon is fascinating and amusing; for example, that meme coin squirrel went from zero to $2 billion in just about nine days. Just because the U.S. government executed a squirrel, it became a $2 billion meme coin traded globally. This phenomena shows how quickly we respond to hot topics in global culture and make it interesting through meme coins. Now, everyone knows about this squirrel that was 'executed' by the U.S. government or New York state. So a meme coin emerged around it.
This is both interesting and reflects reality. There may also be a subculture of dissatisfaction with the government, such as their inflation policies. This phenomenon has also made meme coins a rapidly spreading attention market.
The rapid rise of meme coins demonstrates the responsiveness of global culture.
Dreamer: There are some entities like 'blue-chip' meme coins, like the ones you just mentioned that are related to current events. I think these meme coins will have ups and downs, but we also have some meme coins that have stabilized, such as Dogecoin. Some say it will rise to $1; do you think that's possible?
Arthur: I think it’s possible. This is interesting, especially when it comes to government efficiency departments or new 'Elons' like roles that confirm certain things, which itself becomes a classic meme. I wish I had bought some at that time because those memes are just too good and too interesting. Elon is an excellent meme creator, possibly one of the best meme creators in history. Although I have some doubts about his business model, he is undoubtedly a genius in meme art. So, Dogecoin could indeed reach $1.
However, I think there will be a sense of 'falling from grace' when people start to realize how big the gap is between government propaganda and actual results. People may reassess the meaning of these memes and the messages they convey. This shift will be very interesting.
Advice for newcomers: Stay rational during a bull market and cash out at the right time.
Dreamer: There are now many technologies that make it easier to launch new Layer 1 blockchain projects or meme coins. I think we will see more creativity flooding into this field, along with more specialization trends. Additionally, as you mentioned, the momentum brought by the election is also very strong. If we look back at the past, such as the rise of DeFi and NFTs and other trends that were once hyped up, the excitement back then was quite similar. So, what lessons or cautionary tales are worth sharing? Especially for those experiencing a bull market for the first time, what would you advise them to pay attention to during this process? How can they avoid repeating past mistakes in this 'beautiful yet brutal world'?
Arthur: First of all, no one can profit from the market forever. Everyone knows that quick profits can be made during a bull market, but the key is how to preserve those gains. For example, the meme coins you hold now may no longer exist in one or two months. Its market value could drop from $200 million to $5 million; the changes can be so drastic. You can't predict these things.
Some statistics indicate that only about 0.01% of meme coins can exceed a market value of $500 million, and most traders end up losing money. Many see tremendous gains on paper, yet they always hold onto the mindset of 'I can earn more,' ultimately leading to the loss of wealth they already have.
So if you earn some life-changing money, take some out to cash in. The market will always have opportunities to return. Perhaps you can take a break, cool down for a while, and then reevaluate the market. It is essential to stay rational.
Are there potential risks or catalysts in the market?
Scott: In this case, it's easy for people to experience a round of 'roller coaster' market fluctuations. As you mentioned, some assets may disappear in one or two months. Some people indeed made life-changing money in just a few days, like the meme coin Peanut. But even coins that reach a market cap of $2 billion can quickly crash. Therefore, your point is correct; it is important to cash out at the right time, whether it is meme coins or Bitcoin, and gradually exit some positions. As you said, taking profits won't result in losses.
Dreamer: Are there any 'black swan events' or potential catalysts that might disrupt the market? Looking back at the past few years, such as the collapse of FTX or other unforeseen events, are there any trends or entities we need to be wary of? Under the new Trump administration, has the market cleared these uncertainties and become simpler for development?
Arthur: I think a lot has already been cleared away. Many people suffered heavy losses in the FTX, Genesis, Three Arrows, and Luna incidents. So now perhaps Bitcoin has already risen to $100,000 (maybe when you release this interview, it will be that price). But in the long run, when traditional financial capital sees the price of cryptocurrency rising, they will want to get involved, such as through venture capital.
Many venture capital firms have raised significant funds, similar to the last cycle, and they need to find big companies or important projects to invest in. In the early stages of the market, these funds are usually reasonably allocated and have good uses. However, as the bull market deepens, funds may flow into certain 'hot areas' because investors have to invest to gain returns. In this case, we might see some business models built on the assumption of continuously rising prices, leading to risk accumulation and eventually market imbalance.
I still don't know exactly which sector will encounter this situation, but we have not yet reached the 'overheated' stage. Especially when traditional financial capital enters, over-investment may occur in certain areas, which is where investors need to be vigilant to avoid 'shakeouts' when market prices disconnect from actual situations.
Dreamer: Yes, when I hear you talk, I think that when people have many successful trades, they become bored and crave that feeling of quick profits again. Currently, many Bitcoin Layer 2 protocols have announced yield programs, but where do these yields come from? We don’t want to repeat past mistakes of promising high yields without a solid foundation. Others may look for more trends in pursuit of large returns, which will gradually increase the risks. So for those who have experienced the last bull market, I hope they can learn their lessons, and for newcomers, I hope they can learn from others' experiences.
Casual talk about skiing
This interview has been wonderful. We really appreciate your time. There is an IFC event tonight—a credit competition. I wonder if you and others have time to participate. This is a global event, and we would love to invite you to participate in the future. I believe you will enjoy such events and the influential figures in the crypto field during competitions and activities. Now I will pass the microphone to Scott to conclude this interview.
Scott: Yes, we really appreciate your time and sitting down with us to answer these questions. It would be great to see you at the IFC. One last easy question: when you're not doing cryptocurrency-related things, what do you do? What hobbies do you have? How do you relax or detach from work? Are you a food enthusiast? Do you look for new restaurants? Or are there other ways that keep you motivated?
Arthur: I really enjoy skiing. So every year, I spend three to four months on the mountain, immersed in the snow. During the ski season, I ski for eight hours every day. Aside from exercising and enjoying outdoor activities, I hardly do anything else. This makes me very happy.
Scott: What is your favorite ski spot?
Arthur: Niseko in Japan. Their powder snow is amazing, dry and light. It snows there every January to February, and it's simply stunning.
Scott: So you are preparing now? Adjusting your state?
Arthur: Yes, I'm preparing for skiing. However, the only downside of the ski resorts in Japan is that the slopes aren't steep enough; there aren't those very dramatic steep runs.
Dreamer: The ski resorts in Salt Lake City will have a lake effect. I live in Singapore, but I used to live in the U.S. and often went skiing, although I am a snowboarder.
Scott: Me too! Although I still ski, I prefer snowboarding. Some places are better for snowboarding.
Dreamer: Yes, there are some places that are very suitable. You also won't encounter snowboarders 'trampling' your tracks on the slopes.
Scott: That's amazing! I haven't skied in years, but it's a hobby I've always wanted to pick up again. I come from the Northeastern U.S., grew up in New Jersey and New York, and could easily ski in Vermont. However, I have lived in Houston for the past decade, so skiing isn't as convenient now; it's no longer a matter of packing up the gear and driving a few hours to get there.
Scott: I hope you have fun in the meantime. I really want to go to Japan to experience the joy of skiing; I didn't realize there were such great skiing conditions there. I must try it out in the future.
Bitcoin's price predictions for the end of the year and 2025.
Scott: By the way, let me ask a specific question. What do you think Bitcoin's price will be by the end of this year and at this time next year?
Arthur: I believe Bitcoin will reach $100,000 by the end of this year, and by the end of 2025, it may reach $250,000.
Scott: Did you hear? This is the first prediction released by Alpha First: the price of Bitcoin will reach $100,000 by the end of the year and could hit $250,000 a year later. Perhaps we will have the opportunity to go to DevCon and other events next year to validate this prediction again. I hope it will be not only $250,000 but even higher by then.
