Cryptocurrency

Arthur Hayes thinks Bitcoin can still hit $1M this cycle

advertisement

CoinDesk Consensus

Arthur Hayes has said Bitcoin will never reach $1 million in 90 days.

However, BitMEX’s former CEO said: bankless podcast Host David Hoffman thinks BTC could “absolutely” reach 1 million in this cycle.

“Do you think Bitcoin will be $1 million in 90 days? No, I won’t. Do you think Bitcoin will be $1 million in this cycle? Absolutely.”

Hayes clarified that “this cycle” is in the next two to three years.

Bitcoin to $1 million?

Balaji Srinivasan has made headlines this week following his bet that Bitcoin will reach $1 million by June 17th. The former Coinbase CTO said hyperinflation accelerated by the Fed’s Bank Term Funding Program (BTFP) would cause the move.

of BTFP An emergency lending initiative that provides financial institution financing for pledged US Treasuries, agency debt, mortgage-backed securities, and other eligible assets. This was in response to bank failures, including the failure of Silicon Valley Bank.

“BTFP provides an additional source of liquidity for high-quality securities, freeing financial institutions from having to sell them quickly in times of stress.”

Quantitative easing (QE) refers to central bank asset purchases in a low interest rate environment, with the ripple effect of balance sheet expansion.

Bitcoin magazine (BM) explained that BTFP is QE, but because liquidity is through short-term loans, there are significant differences between programs specifically targeting financial institutions and full purchases of collateral assets. is not. Also, although not mentioned in BM’s article, it should be noted that the US is currently in a (relatively) high interest rate environment.

However, the program is still an expansion of the balance sheet, creating excess liquidity in the banking system.

Hayes Explains How BTC Reached 1 Million

Giving his view on how BFTP will affect crypto/risk-on assets, haze We started by distinguishing between money inside and money outside.

Money inside is a liability on someone else’s balance sheet. Dollars, yen, euros, renminbi, stocks, or bonds. The crucial difference is that “these things cannot be used without an interface between the statutory financial system and the people mandated to act within it”.

By contrast, outside money is not a liability on someone’s balance sheet. Gold, real estate, bitcoin, etc. Outside money has an advantage over inside money because it is not affected by the banking system.

“Even if the banking system fails, foreign exchange still works. You can live in your house, you can walk around with gold bars, you can use the Bitcoin blockchain.”

Hayes said he wants outside money when the Fed underpins the entire banking system, adding that no bank (which holds BFTP-eligible assets) will go bankrupt.

In this setup, the money supply expands infinitely at some point, increasing the price of external money assets such as Bitcoin.

when?

As for why bitcoin won’t hit $1 million anytime soon, Hayes said the program will guarantee the return of depositors’ money. not.

“They aren’t lending this money, so credit creation isn’t happening. I’m only insuring losses. So for the time being, this is all dead money.”

But when the Federal Reserve cuts interest rates, forcing a “bad recession,” etc., and going completely dovish, liquidity in the system will be released. As borrowing becomes easier, the pivot triggers a surge in asset prices and Bitcoin heads towards his $1 million.

Hayes expects the Fed to cut rates “in the near future.” But he still expects the road to $1 million to be bumpy, with a drop along the way.

Related Articles

Back to top button