Original translation: Wu said blockchain
In a recent interview with the podcast Alpha First, Arthur Hayes shared his bold predictions for the future of the cryptocurrency market. He believes that with the possible rise of the Trump administration, the United States' loose monetary policy will trigger a depreciation of the US dollar, which will in turn drive up the prices of Bitcoin and other crypto assets. He also discussed global inflation, sovereign monetary policies, and how to benefit other crypto assets such as Bitcoin and Memecoin. He emphasized that investors need to be vigilant in the bull market and avoid ignoring market risks due to greed. In addition, he looked ahead to future market trends and predicted that Bitcoin could reach the milestone of $250,000 by 2025.
Please note: The views of the guests do not represent the views of Wu Shuo. Wu Shuo does not endorse any products or tokens. Readers are requested to strictly abide by local laws and regulations.
Listen to the full podcast (YouTube):
https://www.youtube.com/watch?v=xONEXGRcBMU
Trump's economic policies will cause the dollar to depreciate and benefit Bitcoin
Dreamer: It’s only been a few weeks since the election and there’s a lot of movement in market prices. What can we expect over the next 12 months? What vision can you share with us? What’s worth keeping an eye on in the overall cryptocurrency forecast landscape?
Arthur: From my point of view, the market's prediction is correct. They expect Trump and his new cabinet members to print a lot of money in the United States. One of their campaign platforms is to attract manufacturing and industrial companies to return to the United States through a weak dollar policy. Then, they will inject a lot of money through bank credit, increase the amount of credit in the US economy, promote production and increase wages. All of this will lead to inflation.
The ultimate losers are those who save dollars or hold treasuries. And those assets with a fixed supply, like Bitcoin, are going to do very well. We're seeing this trend now, right?
So, I plotted some data comparing the total amount of U.S. bank credit to the performance of Bitcoin. Currently, Bitcoin is clearly ahead. This shows that if Trump comes to power, his plan is already clear - weaken the dollar, stimulate the market with credit, get people back to work, and restore U.S. production capacity. I think he will execute on this plan.
Will Bitcoin reach $1 million?
Scott: A follow-up question about Trump. You once made a bold prediction that if Trump came to power, Bitcoin would reach $1 million. Do you still think that this will go as expected? Are you still confident?
Arthur: I am very confident, but I am not sure whether it will be realized in a short time. In fact, this trend started when Trump was elected president in 2016. At that time, he promoted a trade war against China, and the Democratic Party and the Biden administration continued this policy after taking office. So now, this confrontation has penetrated into the political culture of the United States.
The United States has moved much of its manufacturing and production capacity to China and Asia, where these countries have gained competitive advantages through weak currencies, and American workers have suffered as a result. Therefore, the United States must bring these industries back home. To achieve this goal, trillions of dollars of credit will need to be allocated to companies so that they can be profitable in the United States.
Biden has passed measures such as the CHIPS Act, the infrastructure bill, and the Green New Deal, all of which require a lot of funding. This trend will continue.
Global economic policies will drive inflation higher and benefit crypto assets
Dreamer: People in the crypto space are often the most disruptive group of people. There is still a lot to discuss around Trump. From a domestic perspective, your point of view makes sense and makes a lot of people optimistic. But if we look at the international level, how will the election affect foreign policy, war, and trade? For Asia, some policies may bring a certain fear. Will these policies have a negative impact on the economy or cryptocurrency? Or do we not need to worry too much?
Arthur: I think essentially, each country is now pursuing a "country first" policy. The United States has put forward "America First", while China hopes to bring prosperity back to rural China or low-income people through the "common prosperity" plan. Therefore, the Chinese government suppressed the real estate bubble and is now stimulating the economy again through monetary easing policies.
Japan is repatriating money, which will boost its economy, but it will need more credit to prevent its banks from going bankrupt. Europe is getting itself into trouble by cutting off cheap energy from Russia and importing expensive energy from the United States. But they still need to support businesses, so they will also adopt stimulus policies.
So each country is trying to take care of its own people, which means reviving local industry and increasing demand for goods. And this trend will push up inflation around the world, further suppressing the long-term outlook for bond yields.
In such an environment, cryptocurrencies will do well. Although the policies of various countries may seem different, they are actually pursuing the same goal, which is to prioritize the needs of their citizens. This requires an increase in internal credit allocation and an expansion of supply to support production and create jobs for people. This global trend is extremely bullish for Bitcoin and other crypto assets.
Will Bitcoin's Rise Drive Other Crypto Assets?
Dreamer: It looks like this is a great opportunity for cryptocurrencies, especially Bitcoin. But what about other cryptocurrencies? How do you think these will be affected by the rise of Bitcoin? Are you a Bitcoin maximalist who thinks that only Bitcoin has prospects and nothing else will follow? Or do you think other projects such as Ethereum will have opportunities? For example, NFTs, meme coins, and DeFi, these trends have risen and fallen. Will these also benefit from the market rise? Or are you mainly focused on institutional investors and only think that Bitcoin will attract funds?
Arthur: I don’t really pay attention to institutional investors because everyone always says they will enter the market, but they have their own complex investment logic and credit considerations anyway, and they have reasons for buying or not buying. From a retail investor’s perspective, when the price of Bitcoin goes up, the most important asset for everyone is Bitcoin. When my wealth in Bitcoin increases, I don’t want to go back to fiat currency because it doesn’t make sense, right? I won’t invest only in Bitcoin either. I want to invest in other crypto assets that have risen more than Bitcoin.
What else can be done? We will pay attention to meme coins, new Layer 1 blockchains, Layer 2 projects, NFTs, and the gaming sector. Bitcoin leads the market, and then funds will gradually flow to other categories of assets. Because in the final analysis, the goal is to earn more cryptocurrencies, not to exchange them back to fiat currency. I believe that fiat currency will eventually return to zero.
Scott: Yes, I think everyone will try to make a quick profit, and even become a little addicted to this rapid growth. After all, this is one of the fastest growing asset classes. If you make a profit from Bitcoin, many people will not transfer back to fiat currency, but will move to other crypto assets that still have potential. You also mentioned that meme coins in this cycle surprised everyone, just like NFTs in the last cycle. I heard that 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 grow to a billion dollar scale?
Arthur: It's really interesting, I love it. It's interesting and fun, like the meme coin squirrel, which went from zero to $2 billion in about nine days. Just because the US government executed a squirrel, it became a $2 billion meme coin that was traded around the world. It shows how we react to hot topics quickly in global culture and make them interesting through meme coins. Now everyone knows about this squirrel that was "executed" by the US government or the state of New York. So there's a meme coin around it.
This is both interesting and realistic. There may also be a subculture that is dissatisfied with some of the government, such as the inflationary policies they adopt. This phenomenon also makes memecoin a fast-spreading attention market.
The rapid rise of memecoins shows how responsive global culture can be
Dreamer: We also have some 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, like Dogecoin. Some people say it will rise to $1, do you think it's possible?
Arthur: I think it's possible. It's interesting, especially when it comes to characters like the government efficiency department or the new "Elon", who confirm something and become a classic meme in itself. I wish I bought some of them at the time because these memes are so good and funny. Elon is a very good meme creator, probably one of the best meme creators of all time. Although I have some doubts about his business model, he is undoubtedly a genius when it comes to meme art. So, Dogecoin may indeed reach $1.
However, I think there will be a sense of "falling from the altar" when people begin to realize how big the gap is between government propaganda and actual results. People may re-examine the meaning of these memes and the messages they convey. This transformation will be very interesting.
Advice for new entrants: Stay rational and cash out in a timely manner in a bull market
Dreamer: There are a lot of technologies that make it easier to launch new Layer 1 blockchain projects or memecoins. I think we will see more creativity coming into this space, and more professionalization coming in. In addition, 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 have been hyped, the excitement at the time was very similar. So, what lessons or cautionary tales are worth sharing? Especially for those who are experiencing the bull market for the first time, what would you recommend them to pay attention to during this process? How to avoid repeating the same mistakes in this "beautiful and cruel world"?
Arthur: First of all, no one can profit from the market forever. Everyone knows that you can make money quickly in a bull market, but the key is how to keep those gains. For example, the meme coin you hold now may no longer exist in a month or two. Its market value may drop from $200 million to $5 million, which is so drastic. You can't predict these things.
Some statistics show that only about 0.01% of the memecoin market cap will exceed $500 million, and most traders will eventually lose money. Many people see huge gains on paper, however, they always hold the sentiment of "I can make more", which eventually leads to losing the wealth they already have.
So if you've made some life-changing money, take some of it out. There's always a chance the market will come back. Maybe you can take a break, take a vacation, and then reassess the market. It's important to stay rational.
Are there any potential risks or catalysts in the market?
Scott: In this situation, it's easy to experience a roller coaster of market volatility. As you mentioned, some assets can disappear in a month or two. Some people do make life-changing money in a few days, like the meme coin Peanut. But even a coin with a market cap of $2 billion can plummet quickly. So you're right to cash out when appropriate, whether it's meme coins or Bitcoin, you need to gradually exit some of your positions. As you said, you won't lose money if you take profits.
Dreamer: Are there any “black swan events” or potential catalysts that could disrupt the market? If we look back over the past few years, such as the FTX crash or other unforeseen events, are there any trends or entities that we need to be vigilant about? Has the market cleared up these uncertainties and become simpler to develop under the new Trump administration?
Arthur: I think a lot of it has been cleaned up. A lot of people lost a lot of money in the FTX, Genesis, Three Arrows, and Luna incidents. So, maybe Bitcoin has risen to $100,000 now (maybe it will be at this price when you publish this interview). But in the long run, when traditional financial funds see the price of cryptocurrencies rise, they will want to participate, such as through venture capital.
Many venture capital firms have raised a lot of money, and similar to the previous cycle, they need to find big companies or important projects to invest in. In the early stages of the market, these funds are usually allocated reasonably and have good uses. But as the bull market deepens, funds may flow to certain "hot areas" because investors have to invest in order to get returns. In this case, we may see some business models built on the assumption of rising prices, leading to the accumulation of risks and ultimately market imbalances.
At present, I don’t know which specific sectors will experience this, but we have not yet reached the “overheating” stage. Especially when traditional financial capital enters, overinvestment may appear in certain areas, and this is where investors need to be vigilant to avoid a “shuffle” when market prices are out of touch with reality.
Dreamer: Yes, when I was listening to you, I thought that when people have a lot of successful trades, they will become bored and long to experience the feeling of quick profits again. There are many Bitcoin second-layer protocols that have announced profit plans, but where do these profits come from? We don’t want to repeat the mistakes of the past and make the mistakes of promising high returns without actual basis. Others may look for more trends to pursue big returns, so the risks will gradually increase. So, for those who have experienced the last bull market, I hope they can learn lessons, and for newcomers, I also hope they can learn from the experience of others.
Talking about skiing
This has been a great interview. We really appreciate your time. There is an IFC event tonight - a credit competition. I wonder if you and others have time to attend. This is a global event and we very much hope to have the opportunity to invite you to participate in the future. I believe you will enjoy this kind of event, the competition and the influential people in the crypto field at the event. Now I will hand the microphone over to Scott to end this interview.
Scott: Yeah, we really appreciate your time and sitting down with us to answer these questions. It would be great to see you at IFC. One last lighthearted question: When you’re not working on crypto, what do you do? What are some hobbies? How do you unwind or unplug? Are you a foodie? Do you seek out new restaurants? Or are there other ways that keep you motivated?
Arthur: I love skiing. So I spend three to four months a year in the mountains, soaking in the snow. During ski season, I ski eight hours a day. I don’t do much else except exercise and enjoy the outdoors. It makes me very happy.
Scott: Where is your favorite place to ski?
Arthur: Niseko in Japan. Their powder snow is amazing, dry and light. It snows every January to February and it's just amazing.
Scott: So you're preparing now? Getting into shape?
Arthur: Yes, I am preparing for skiing. But the only drawback of ski resorts in Japan is that the slopes are not steep enough, there are no very dramatic steep slopes.
Dreamer: The ski resorts in Salt Lake City have a lake effect. I live in Singapore, but I used to live in the United States and I go skiing a lot, but I am a snowboarder.
Scott: Me too! I still ski, but I prefer snowboarding. There are some places that are great for snowboarding.
Dreamer: Yes, there are some places that are very suitable. You won't encounter snowboarders "trampling" your tracks on the ski slopes.
Scott: It’s awesome! I haven’t skied in a few years, but it’s a hobby I’ve always wanted to get back into. I’m from the Northeast, grew up in New Jersey and New York, and I had easy access to skiing in Vermont. But I’ve lived in Houston for the past 10 years, and it’s not as easy to get to skiing as it used to be. It’s no longer just a matter of loading up your gear and driving a few hours to get there.
Scott: I hope you have fun in the next few days. I really want to go to Japan to experience the fun of skiing. I didn't expect that there are such great skiing conditions there. I must try it in the future.
Bitcoin price prediction for the end of the year and 2025
Scott: Just a specific question by the way. What do you think the price of Bitcoin will be at the end of this year and this time next year?
Arthur: I think 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 that? This is the prediction that Alpha First first published: Bitcoin price will reach $100,000 by the end of the year, and may reach $250,000 a year later. Maybe we will have a chance to go to DevCon and other events next year to verify this prediction again. I hope that by then it will not only be $250,000, but higher.
