Arthur Hayes, co-founder of BitMEX, predicts that the depreciation of fiat currency will lead to an increase in the value of Bitcoin (BTC) and stocks. In his latest analysis, the experienced crypto investor asserts that he is confident in the onset of an inflationary period in the economy and believes that BTC will “regain its mojo”.
Hayes refers to projections made by the Congressional Budget Office (CBO), which estimates that the US federal budget deficit will reach $1.9 trillion in the 2024 fiscal year, marking the highest amount recorded outside of the COVID-19 years. According to Hayes, this indicates that a recession is unlikely to occur. However, he acknowledges that a significant portion of the population may face severe financial difficulties, but states that the American economy will continue to thrive.
Hayes highlights loose fiscal and monetary conditions, which he believes will persist in the future. Consequently, he advises holding onto cryptocurrency as the best method to preserve wealth. Drawing a parallel between the current economic climate and historical periods from the 1930s to the 1970s, Hayes suggests that it is wise to convert fiat currency into crypto assets due to the forthcoming debasement resulting from the expansion and centralization of credit allocation through the banking system.
Additionally, Hayes predicts that companies will take advantage of cheap credit to inflate their own stock prices. He explains that central bankers have created bank reserves through bond purchases, thereby reducing the cost and increasing the availability of credit. In private capital markets, this credit has been allocated to maximize shareholder returns. Hayes argues that companies can easily boost their stock prices by reducing the number of shares available through stock buybacks. By accessing low-cost credit and borrowing money, companies have the means to repurchase their own stock.
In conclusion, Arthur Hayes anticipates a rise in the value of Bitcoin and stocks due to the depreciation of fiat currency. He asserts that the current economic conditions, characterized by loose fiscal and monetary policies, make holding onto cryptocurrency the optimal strategy for wealth preservation. Additionally, he foresees companies using cheap credit to inflate their stock prices through stock buybacks.
