BitMEX co-founder Arthur Hayes published another macro-economic breakdown on Tuesday, focusing on why Bitcoin’s price suddenly surged this week.
The analyst argued that now is the best time for crypto traders to step out of US Treasuries, and back into BTC.
The Speech That Pumped Bitcoin
According to Hayes, the crypto community has falsely attributed Bitcoin’s rally this week to excitement about a U.S. spot Bitcoin ETF potentially receiving approval. Such excitement, he said, already occurred last week in response to false rumors, and Bitcoin’s price sank back to $27,000 as the rumor was dispelled.
“Bitcoin — along with gold — is rallying against a backdrop of an aggressive selloff in long-end US Treasuries,” wrote Hayes. “This isn’t speculation as to an ETF being approved — this is Bitcoin discounting a future, very inflationary global world war situation.”
Hayes noted that bonds are selling off in response to recent statements from the Federal Reserve and President Joe Biden. On one hand, the Fed has signaled that it is near the end of its interest rate hiking cycle, meaning the market has no more incentive to hold long-end bonds.
On the other, Biden has called on Congress to continue supporting overseas conflicts in countries like Ukraine and Israel, totaling $105 billion in total. This has caused more Treasures to sell off as bondholders doubt the government’s capacity to fund such war efforts.
It also drove investors to park their wealth in gold instead as an alternative safe-haven asset. Bitcoin, which also rose, is often compared to gold since both assets share many valuable monetary properties.
“Gold nor Bitcoin yield anything,” Hayes explained. “Therefore, if they are rallying while US Treasury yields spike, that tells me that both safe haven assets are discounting a future of more government spending and more inflation.”
Time to Buy Bitcoin
Over the past year, Hayes has frequently argued in favor of continuing to buy U.S. Treasuries due to their high yield rate, until receiving some type of market signal to return to buying BTC.
While once waiting for a “financial blowup” or “Fed pivot” to return to crypto, Hayes said Biden’s commitment to “another open-ended conflict” is the return trigger he needed.
“It’s time to start rotating out of short-term US Treasury bills and into crypto,” he concluded. “The perfect setup is usually staring you right in the face, and you are just too preoccupied with the past to notice.”
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