BitMEX co-founder Arthur Hayes predicts that Bitcoin and high-potential altcoins are about to enter a significant bull run against the backdrop of G7 central banks beginning to ease monetary policy.
In his latest blog post, “Group of Fools,” Hayes explains how changes in monetary policy could create favorable conditions for crypto market growth.
Hayes specifically highlighted the recent rate cuts by the Bank of Canada (BOC) and the European Central Bank (ECB), marking the first time in many years that G7 countries have lowered their benchmark rates. He believes this shift will inject new life into the crypto market and said now is the time to invest heavily in Bitcoin and altcoins.
Meanwhile, Hayes criticized the G7's handling of the yen and suggested that the U.S. Federal Reserve System (Fed) should exchange unlimited amounts of dollars for yen with the Bank of Japan (BOJ) to strengthen the yen. However, he pointed out that the G7's current strategy seems to be focused on convincing the market that interest rate differentials will narrow over time, which could lead to buying the yen and selling other currencies.
The core of Hayes' argument this time is the difference between the BOJ's 0.1% policy rate and the 4% to 5% rates of other G7 central banks. He believes that this difference is the fundamental factor driving the exchange rate. He further explained that during the pandemic, central banks around the world provided cheap funds to combat economic slowdowns, but all central banks except the BOJ raised interest rates sharply due to rising inflation. The reason why the BOJ cannot raise interest rates is that it holds a large amount of Japanese government bonds (JGBs). Raising interest rates will cause the price of JGBs to fall, resulting in significant losses for the central bank.
Hayes further pointed out that lowering interest rates to reduce interest rate differentials is the only viable option left for the G7 at a time when inflation is still above target. He believes that the recent rate cuts by the BOC and ECB are strange, speculating that this may be a coordinated effort to manage the value of the yen and prevent a depreciation of the renminbi that could destabilize the global financial system.
Looking ahead, Hayes expressed doubts about whether the Fed will cut interest rates before the upcoming U.S. presidential election, despite market speculation. He predicted that the Fed and BOJ are likely to maintain current policies at the upcoming meetings, while the Bank of England (BOE) may unexpectedly cut interest rates after the G7 summit.
Hayes stressed that the recent rate cuts signal the beginning of an easing cycle that will stimulate the crypto market. He believes these conditions will be a catalyst for the crypto market and has begun to shift his investments from stablecoins back to “high conviction junk coins.” He also urged projects in his Maelstrom portfolio to conduct token issuance immediately.
Looking back at historical trends, Hayes noted that both traditional stocks and Bitcoin have seen significant increases during periods of low interest rates. He mentioned that following the Fed’s sharp reduction in interest rates to 0.25% in 2020, Bitcoin surged from below $4,000 to $64,000 between March 2020 and April 2021. #比特币牛市 #G70P #货币政策 $BTC
Conclusion:
Arthur Hayes' analysis reveals the profound impact that global monetary policy may have on the cryptocurrency market. As central banks in G7 countries ease monetary policy, more capital is expected to flow into the market, especially for Bitcoin and potential altcoins. This shift in monetary policy not only brings new growth opportunities to the cryptocurrency market, but may also trigger a new investment boom.
Hayes' prediction is based on a deep understanding of central bank behavior and observation of historical trends. If his prediction comes true, we may witness Bitcoin and other cryptocurrencies reach unprecedented heights. However, while pursuing high returns, investors should also pay close attention to market dynamics and carefully assess risks to ensure that they remain robust in volatile markets.
