Arthur Hayes, founder of the BitMex brokerage, published a lengthy article this Thursday (1st). Entitled “patience is beautiful”the 23-minute text covers, among other things, US monetary policy and its effects on Bitcoin.
As a highlight, the billionaire claims that while the rate hike is being used to fight inflation, it will have the opposite effect. In other words, this will cause the US to print more dollars, devaluing their currency.
Hayes points out that many must be wondering if the US banking crisis shouldn’t keep Bitcoin higher, and urges patience, citing a prediction of when Bitcoin is expected to rise.
Arthur Hayes comments on the impact of a rate hike in the US
While monetary tightening means less money flowing into the economy, Arthur Hayes points out that the Fed will have to pay the promised interest to those who park their dollars. The billionaire summarized the scenario in three points:
- The private sector and US banks prefer to park money with the Fed, which will cause RRP (reverse repurchase program) and IORB (interest on reserve balances) balances to grow.
- If the Fed wants to raise rates, it needs to raise the rate it pays on money parked in the RRP and IORB.
- Soon the US Treasury will have to fund deficits of $1 to $2 trillion for the foreseeable future at ever-higher short-term interest rates.
Following his reasoning, Hayes points to this “The net effect of US monetary policy is exciting right now and the money press is putting out more and more fiat toilet paper.”
Finally, the billionaire claims that a rise in interest rates has the opposite effect than expected. After all, someone will have to foot the bill.
“But if raising interest rates increases the money supply, then raising interest rates increases inflation.”
The same thought has already been shared by Luke Gromen, macro investor. However, it is possible that the Fed will continue its aggressive monetary policy in June.
Shouldn’t Bitcoin Rise?
In addition to commenting on US inflation, Arthur Hayes also pointed to other problems in the US economy. In another excerpt of his text, the billionaire talked about Bitcoin’s volatility and volume.
Noting that some investors are wondering why Bitcoin has not continued its rally since the US crisis is far from over, the billionaire urged patience.
“Nothing goes up or down in a straight line – we zig and we saw. Remember “Kaiseki”: the destination is known, but not the path.”
Finally, Hayes points out that the problems the US is experiencing will spread to other fiat money systems. That is, more reasons to believe in a Bitcoin high.
“The real Bitcoin bull market will begin at the end of the third and beginning of the fourth quarter of this year.”
“Between now and later, relax”writes Hayes. “Go on vacation and enjoy nature and the company of your friends and family. Because this fall, you better be tethered to your merchant ship, ready to take off.
At the time of writing, Bitcoin is listed at $27,000, almost static after closing the month of May in decline. Hayes’ full text can be found on his personal blog.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.