TL; DR
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Arthur Hayes believes in the grueling year of rate hikes we just experienced should risky investments (such as BTC) down the toilet.
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On the other hand, crypto proves to be quite resilient to changes in the traditional financial system.
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On the other hand, once the Fed starts cutting rates and printing money again (which is expected to happen in the next 1-2 years), a good chunk of that new money will flow into AI and crypto, driving prices up. rise (hurrah!) and that flow of money will then “produce the biggest asset bubble we’ve had in the last 80 years since the Great Depression of the 1930s” (boooo!).
Full story
Right now, Bitcoin is in the “Harry Potter at the End of Book 7” era.
It should be dead…But that is not it.
At least that’s what we deduced from the latest statements by BitMEX founder Arthur Hayes. Arty reflects on the grueling year of rate hikes we just experienced should risky investments (such as BTC) down the toilet.
The basic theory is:
Interest rates go up → stuff gets more expensive → we all cut back on ‘nice-to-haves’ (e.g. Bitcoin) and focus on the ‘need-to-haves’ (e.g. food, shelter, a lock on Jimmy Buffet’s mustache hair for the shrine we’re building in tribute to the mayor of Margaritaville himself, etc.)
But as far as Bitcoin is concerned, investments are not drying up as expected.
And with that, Arthur has two theories. One exciting. A terrifying.
The exciting theory:
“The standard script is starting to crumble.
Whether the Fed raises or lowers [interest rates]we are in a good position as a cryptocurrency industry.”
That is, crypto proves to be quite resilient to changes in the traditional financial system.
The terrifying theory:
Right now, Arty sees three manias take hold of the financial world, which could lead to a massive financial meltdown. These are: AI, crypto and money printing.
The theory is that once the Fed starts cutting rates and printing money again (which is expected to happen in the next 1-2 years), two things will happen:
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A good chunk of that new money will flow into AI and crypto, driving prices up (hurray!).
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That cash flow will then produce “the biggest asset bubble we’ve had in the last 80 years since the Great Depression of the 1930s” (boooo!).
Let’s hope he’s only half right.