Original author: BitMEX
Brief Overview
Memecoins have been on a wild ride this week, with the top memecoin rising more than 90% in just seven days. Meanwhile, Bitcoin continued its upward momentum, rising more than 10% and hitting a new high.
The memecoin craze this week was driven by two major catalysts. On the political front, the Trump administration officially announced that Elon Musk would co-lead the Department of Government Efficiency (DOGE) initiative, and Musk's subsequent tweets about Dogecoin and Peanut sparked huge interest. In addition, major exchanges such as Robinhood and Coinbase listed Pepecoin - a coin they had previously hesitated to support - marking a shift in the cryptocurrency landscape after Trump's victory.
In our trade analysis section, we explore the latest macro picture – how our own Arthur Hayes envisions the catalysts and the case for Bitcoin to hit $1 million.
Data Overview
High-quality currency
$PNUT (+160.9%): Elon praises Peanut for "saving the country"
$DOGE (+91%): Trump officially appoints Elon Musk as co-head of "Department of Government Effectiveness"
$PEPE (+90.4%): PEPE was listed on Coinbase and Robinhood this week, exceeding expectations
Inferior currency:
$LDO (-14.7%): LDO had a great week last week, but memecoins stole the show.
$AAVE (-13.6%): Same reasons as LDO; despite DeFi also being a major beneficiary of Trump’s presidency, it failed to attract investment.
$TIA (-8.5%): No one cares about “cool tech” and VC coins.
News Flash
Macro
ETH ETF weekly net outflow: +$556 million (source)
BTC ETF weekly net outflow: +$1.87 billion (source)
Donald Trump appoints Elon Musk and Vivek Ramaswamy to head new Department of Government Efficiency (DOGE) initiative (Source)
Franklin Templeton expands $410 million money market fund to Ethereum blockchain (Source)
Hawkish comments from Fed Chairman Jerome Powell throw cold water on cryptocurrency markets (Source)
Republican state attorneys general and DeFi lobby sue SEC over crypto enforcement actions (source)
US ETFs received $4.7 billion in inflows in 6 days, making Bitcoin the world’s seventh largest asset (Source)
Michael Saylor: Strategic Bitcoin Reserves Have Precedents with Other Large-Scale U.S. Government Purchases (Source)
Tether issued 5 billion USDT in 5 days to increase liquidity for the bull market (Source)
Hashkey CEO says Trump administration could affect China’s acceptance of Bitcoin (Source)
project
VanEck launches SUI ETN to European investors, token price hits all-time high (Source)
Tether launches new platform to simplify asset tokenization process for companies and countries (Source)
Trump-backed World Liberty Financial uses Chainlink data services, and the DeFi platform is gradually taking shape (source)
Solana supports 89% of new token issuance, memecoin craze continues to drive network activity (Source)
Robinhood adds SOL, ADA, XRP, and PEPE support for US investors (Source)
Binance Launchpool and pre-trading will list Usual (USUAL) (Source)
McDonald's partners with Doodles to launch coffee and collectibles (Source)
Trading Insights
NOTE: The following does not constitute financial advice. This is a compilation of market news and we always encourage you to do your own research before executing any trades. The following is not meant to express any guaranteed returns and BitMEX is not responsible if your trades fail to perform as expected.
Long-term outlook: What will drive Bitcoin to $1 million?
In Arthur Hayes' recent article, he lays out why the United States is moving toward what he calls "American capitalism with Chinese characteristics" - a hybrid economic system where policies prioritize the ruling elite while selectively stimulating the economy. For those who hold Bitcoin and other cryptocurrencies, this may be the most favorable environment yet to see your net worth soar.
Key points:
Expect high growth in inflation-resistant assets: As fiat currencies face long-term devaluation, Bitcoin and cryptocurrencies are best positioned to prosper.
Staying Long on Bitcoin: In Hayes’ view, Bitcoin is the most effective way to hedge against what he sees as the inevitable erosion of fiat currencies.
Watch for regulatory changes: Moves to relax bank regulations and allow unlimited quantitative easing could spark inflation and further boost Bitcoin’s value as a safe haven.
Beyond Capitalism: America's Move toward State-Controlled Growth
Hayes believes that the U.S. economy has deviated from free market capitalism and evolved into a government-controlled system focused on maintaining elite power. Since 2008, policies have socialized losses (such as bank bailouts) while privatizing gains, creating extreme wealth disparity. For Bitcoin holders, this is the perfect situation - every distortion of the fiat currency system highlights the advantages of Bitcoin, a truly decentralized asset.
"Quantitative Easing for the Rich" vs "Quantitative Easing for the People"
From 2009 to 2020, quantitative easing (QE) created a process where money flowed to the top, driving up asset prices but doing little to help average Americans. However, COVID-19 marked the arrival of “QE for the People.” Stimulus checks and direct payments to average Americans created real spending, sparked real economic activity, and provided a glimpse into what happens when money flows to the masses. This period also showed us a key point: when average people have more money, inflation sets in — bad news for bonds, but good news for Bitcoin.
"Reshoring" and the Rise of America's Strategic Industries
Hayes expects that under Trump, there will be a renewed focus on "reshoring" key industries. The government is likely to pour subsidies and cheap financing into the domestic manufacturing, defense, and technology industries in the United States to create jobs and reduce dependence on foreign suppliers. The conclusion? As government-backed industries flourish, crypto assets such as Bitcoin will continue to thrive as an "anti-fiat currency" option against a backdrop of debt inflation and money creation.
Fiat currency erosion and Bitcoin hedging
Hayes predicts that inflation will rise, with the government pushing up wages through support for unions and strategic job creation. Savings and bonds will become less attractive as real returns fall. For Bitcoin holders, this environment is ideal: Bitcoin, the millennial generation's "financial repression hedge," becomes the best way to protect against the debasement of fiat currencies. Hayes recommends continuing to hold BTC long positions while the government pursues aggressive fiscal policies that debase fiat currencies over time.
Potential ‘Unlimited QE’ Is Good for Bitcoin
If the Fed relaxes capital rules, banks could buy up large amounts of U.S. Treasuries, creating nearly unlimited liquidity to finance government debt. This "poor man's quantitative easing on steroids" would drive massive credit growth and spur inflation - both of which have historically been associated with Bitcoin appreciation. For Bitcoin holders, this means a continued weakening of the dollar and an increasing appeal for decentralized assets.
With plans to support defense, healthcare, and industrial reshoring, Hayes predicts a continued injection of credit into the economy. This massive debt issuance will mimic China's state-managed economic policies, boosting growth while devaluing the dollar. As the purchasing power of fiat currencies declines, Hayes believes Bitcoin could soar, potentially reaching $1 million per coin, as more investors view it as the ultimate inflation hedge.
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