Markets
Buy Now, Crypto Bull Market Returns, Says Arthur Hayes
In a new rehearsal Titled “Bunch of Fools,” Arthur Hayes, the outspoken co-founder of cryptocurrency exchange BitMEX, takes a critical look at recent macroeconomic developments and their implications for the cryptocurrency market. Hayes, known for his blunt and often provocative comments, employs a mix of technical analysis, central bank criticism and money market insights to build a case for what he believes will be the return of a Bitcoin and crypto bull market.
A “group of fools”
He begins by emphasizing the importance of the dollar-yen exchange rate as a macroeconomic barometer. According to Hayes, this metric crucially influences global financial stability and political decisions. “The dollar-yen exchange rate is the most important macroeconomic indicator”, he states.
Hayes revisits his earlier proposal that the US Federal Reserve (Fed) engage in extensive dollar-for-yen swaps with the Bank of Japan (BOJ), a move he argues would empower the Japanese Ministry of Finance to reinforce the yen through targeted interventions in foreign exchange markets. Despite the theoretical benefits of this strategy, Hayes notes, with a mix of irony and frustration, that the G7 nations, which he refers to as the “Group of Fools,” have chosen a different path.
The narrative then turns to a critical examination of the strategies of the G7 central banks. Hayes points out the stark discrepancies in interest rates between major economies, with Japan maintaining a rate close to zero while other nations hover around 4-5%. He criticizes the conventional wisdom that supports rate cuts as a tool to manage inflation, which universally targets a 2% rate among G7 countries despite their diverse economic conditions.
“All G7 central banks – with the exception of the BOJ – have aggressively raised rates in response to inflation spikes,” writes Hayes. However, it highlights yesterday’s unexpected rate cuts by the Bank of Canada and the European Central Bank, despite prevailing inflation trends, suggesting a deeper and undeclared economic strategy aimed at strengthening the yen in a context of tensions. geopolitical and economic relations with China.
He describes this move as a cessation of what he calls “rate hike Kabuki theater,” a maneuver he believes is designed to maintain dominance of the global financial system led by Pax Americana.
Why Bitcoin and Crypto Bull Run Return
It is in this context that Hayes addresses the implications for the crypto market. Looking ahead, Hayes turns his sights to crypto markets, suggesting that these recent changes signal a fortuitous environment for investing in digital assets. Hayes speculates that coordinated actions by central banks to adjust interest rates downward despite high inflation are setting the stage for increased liquidity in global markets, which traditionally benefits riskier assets like Bitcoin and later altcoins.
“The June central bank fireworks, kicked off this week by BOC and ECB rate cuts, will catapult crypto out of the summer doldrums in the northern hemisphere. This was not my expected base case. I thought the fireworks would start in August, right around the time the Fed holds its Jackson hole symposium,” Hayes noted.
He argues that these changes in monetary policy will likely trigger a bull market in Bitcoin and crypto, especially as central banks appear to be entering a rate easing cycle. “We know how to play this game. It’s the same game we’ve been playing since 2009, when our Lord and Savior Satoshi gave us the weapon to defeat the TradFi demon. Operate long Bitcoin and, later, shitcoins.” Hayes declares, referring to the pseudonymous creator of Bitcoin.
As the June 13-15 G7 meeting approaches, Hayes anticipates new developments that could influence global financial markets. He expects that the communique from this meeting will likely explicitly address currency and bond market manipulations, or at least signal continued accommodative policies. Furthermore, Hayes predicts that despite conventional caution against political changes near major political events like the US presidential electionUnusual circumstances can cause unexpected movements.
Hayes concludes his essay by reinforcing his bullish stance on Bitcoin and cryptocurrencies, driven by his analysis of G7 monetary policies and their impact on global exchange rates and financial stability. His call to action for the crypto community is to capitalize on these developments, positioning themselves for what he predicts will be a profitable phase in the markets.
“For my excess crypto money in synthetic dollars, […] It’s time to deploy it again on conviction shit. […] But suffice it to say, the crypto bull is waking up and is about to rip the skin off profligate central bankers,” concludes Hayes.
At press time, BTC traded at $71,200.
Featured image created with DALL·E, chart from TradingView.com