Bitmex founder Arthur Hayes predicts China’s aggressive monetary easing could spark a historic bitcoin rally, as the yuan’s appreciation indirectly boosts demand for the cryptocurrency.

Bitcoin About to Explode? Arthur Hayes Weighs in on China’s QE Policy

Arthur Hayes, founder and former CEO of Bitmex, published a blog post on Monday predicting that China’s quantitative easing measures could spark a strong bitcoin rally. Hayes argued that China’s massive monetary intervention, aimed at reviving its banking and real estate sectors after a historic property collapse, will ultimately push bitcoin prices higher.

Emphasizing that the value of bitcoin increases as fiat currencies are devalued through government stimulus and intervention, he described:

As long as fiat money is created, bitcoin will skyrocket. It doesn't matter who the end recipient is.

Hayes explained that China's real estate crisis and subsequent re-inflationary policies laid the groundwork for an unprecedented surge in credit, which he predicted would indirectly flow into the bitcoin market.

“That means bitcoin will skyrocket on a secular basis as China recapitalizes its banking system and real estate sector,” he wrote. “Given that China’s real estate bubble is the largest in human history, the amount of RMB credit created will be on par with the total amount of dollars printed in the US in response to COVID in 2020-2021.” With such a large-scale fiat expansion in mind, Hayes argues:

Such a warning could encourage investors to choose bitcoin as a store of value instead of stocks or real estate.

Despite China's crackdown on bitcoin exchanges, Hayes noted that "even though exchanges are banned from offering public bitcoin/CNY trading pairs, bitcoin and cryptocurrencies are still thriving in China." The former Bitmex CEO added: "Since the Chinese government knows that they cannot ban bitcoin, and that bitcoin and cryptocurrency ownership is not banned in China (contrary to what some uninformed financial media say), Beijing wants them to remain out of sight and out of mind."

Firmly believing that bitcoin performs best when currencies are devalued, Hayes concluded:

No major risk asset class has weathered currency depreciation like bitcoin. Investors instinctively know this, and when it comes time to think about how to protect the purchasing power of their savings, bitcoin will be staring at you like a Kwisatz Haderach.

He tempered expectations of an immediate surge, warning that “PBOC QE and the reacceleration of bank credit growth will take time. It takes time for chemotherapy to kill the patient.” However, he predicted a long-term bitcoin bull run, predicting that “when the average wealthy person living in coastal Zhou decides they must have bitcoin at any yuan price, the price volatility will return to August 2015, when, after a shocking PBOC devaluation of the yuan, bitcoin rose from $135 to $600 — a nearly fivefold increase in less than three months.”
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