Arthur Hayes, the founder of BitMEX, published a long article (Trump Truth) analyzing how Trump’s policies after taking office will have a profound impact on the global economy, especially in terms of monetary policy and financial markets. He predicted how the United States, Japan, China and Europe will respond to Trump's truth, and these changes will also drive the growth of the Bitcoin and cryptocurrency markets.
What is Trump Truth?
Arthur Hayes compared US President-elect Donald Trump to a tool for revealing the truth, which also echoes the name of his social platform Truth Social. Trump Truth can reveal the geopolitical and economic issues in various countries around the world. the real situation. He believes Trump's outspokenness has forced other world leaders to acknowledge and deal with the problems they face.
What is the truth about America?
Trump hopes to reindustrialize the United States by weakening the dollar, providing tax subsidies, and deregulating the economy.
The dollar is devalued! Devalued for what?
Trump and incoming Treasury Secretary Bessent have repeatedly discussed the need to weaken the dollar to achieve U.S. economic goals. The question is, what should the dollar depreciate against, and when?
The United States holds 8,133.46 tons of gold, the largest gold holding of any sovereign country. Hayes believes that the fastest way to achieve a devaluation of the US dollar is "to depreciate relative to gold."
The price of gold on the U.S. balance sheet is $42.22 per ounce. But the current spot price of gold is about $2,647, assuming Bessant can convince the U.S. Congress to change the legal price of gold, devaluing the dollar relative to gold. In this case, the U.S. dollar credit would be available through the Treasury's TGA account with the Federal Reserve.
Is a Bitcoin strategic reserve possible?
There has been a lot of discussion recently about the Bitcoin Strategic Reserve (BSR). U.S. Senator Lummis has proposed legislation that would force the Treasury Department to purchase 200,000 BTC per year for five years. Interestingly, if you read the bill, she proposed funding the purchases by raising the price of gold held on the government's balance sheet, as described above.
(Lummis Bitcoin Reserve Act: Will establish state storage facilities and raise funds from the Federal Reserve’s gold revaluation)
If the U.S. government creates more dollars through changes in the value of gold and uses some of those dollars to buy Bitcoin, its fiat price will rise. This in turn will spur competitive sovereign purchases by other countries that must catch up with the United States. Then the price of Bitcoin will gradually increase.
However, Hayes doesn’t think a Bitcoin strategic reserve will happen. He believes that politicians would rather spend their newly created dollars on providing benefits to the people to ensure their victory in the next upcoming election. However, it does not matter whether the United States will implement a strategic reserve of Bitcoin, because the mere threat of it will create buying pressure.
What is the truth about China?
Chinese President Xi Jinping has two major headaches to solve: creating jobs for the more than 20 percent of unemployed youth and stemming the fall in housing prices.
To do this, China must implement quantitative easing (QE) and further allow the yuan to float freely. A weaker yuan will allow Chinese manufacturers to export more. In the short term, this will help put Xi Jinping in a better negotiating position with Trump, as he will have to agree to certain demands from the Trump team in exchange for Chinese manufacturers' better access to American consumers.
(Major investment consultants around the world predict that Trump’s tariff sanctions will cause the offshore RMB to depreciate to a record low)
What is the truth about Japan?
There are serious financial imbalances between Japan and the United States. Japan is the largest holder of U.S. Treasury bonds. Japan also pursued an aggressive quantitative easing policy, which evolved into yield curve control (YCC), resulting in extreme weakness in the yen against the dollar.
Trump’s truth is that the dollar should strengthen against the yen. The Bank of Japan must raise interest rates, but will this trigger a yen carry-unwinding battle royale in August?
Hayes believes that as the U.S. provides a naval base in Japan to deter China's maritime moves, Japan's semiconductor production helps ensure that the U.S. has a friendly supply of critical components. Therefore, Trump will instruct Bessent to take necessary measures to ensure that Japan can economically withstand the impact of the appreciation of the yen. One way to do this is for Bessent to use the power of the U.S. Treasury Department to offer dollar-yen central bank currency swaps (Swaps) to the Bank of Japan so that any sales of Treasury bonds and U.S. equities can be absorbed on the sidelines. This has been deeply analyzed in Hayes’s previous article, and Lian News has also reported it for everyone based on current events:
(Will Japan sell large amounts of U.S. debt? Arthur Hayes: The United States will start printing money and needs to accelerate its move to crypto-risk assets!)
What is the ultimate global truth?
Our terminal of truth is the 24/7 crypto market. Bitcoin’s rise following Trump’s victory in early November was a leading indicator of accelerating growth in the fiat currency supply. In response to Trump’s truth, every major economic group/country must react immediately. The response was currency devaluation and increased financial repression.
The chart below indicates that Bitcoin (yellow line) is leading an increase in U.S. bank credit (white line).
How does Hayes predict near-term crypto trends?
Before we enter the crash-boom phase of the cryptocurrency bull market, Hayes believes the cryptocurrency market will experience a painful decline around Trump’s Inauguration Day on January 20, 2025. Its family office Maelstrom will reduce some positions in advance and hopes to repurchase some core positions at a lower price sometime in the first half of this year.
But few traders time the highs and lows correctly, and if the bull market continues past January 20, Maelstrom will admit defeat, lick his wounds, and return to the bull market.
Trump Truth opened my eyes to the structural flaws in the global order. Trump Truth taught me that the best way to maximize returns is to own Bitcoin and cryptocurrencies. Therefore, I would buy the dip.
This article Arthur Hayes: What is the Trump truth? Which assets should be deployed in advance first appeared in Chain News ABMedia.
