In a recent blog post on his Substack, Arthur Hayes, Chief Investment Officer of Maelstrom and former CEO of BitMEX, shared his insights on the future of the Bitcoin bull market.
Hayes believes that the real Bitcoin bull market will commence in the late third and early fourth quarter of this year. Taking advantage of the current calm market, he plans to gradually increase his allocation to Bitcoin after the Treasury General Account (TGA) is replenished.
Hayes started his blog by sharing his experience in Tokyo before attending the Bitcoin Conference in Miami. He emphasized that the Bitcoin price is influenced by fiat liquidity and technology, and he intends to shift his focus to technological advancements within the Bitcoin and crypto space during the summer months.
The crux of Hayes’ essay lies in his analysis of the US banking system. He argues that major banking systems, including the US, are facing significant challenges. Stimulus measures provided by governments worldwide led to a surge in assets within the banking system.
However, with the rise in inflation, banks have been unable to compete with the government’s higher interest rates, causing depositors to seek better yields elsewhere.
This has raised concerns about the solvency of several banks and has prompted stockholders to sell their shares, exacerbating the problem.
Hayes disagrees with the belief that the US banking system is fundamentally sound, highlighting the need to address the systemic issues banks face.
He presents two options for banks: selling assets at a loss and raising deposit rates or relying on the government to bail them out by swapping assets with freshly printed dollars. However, neither option guarantees long-term profitability or stability for the banking system.
Shifting his attention to the US Treasury, Hayes addresses the issue of debt issuance and its impact on the market. The Treasury needs to raise the debt ceiling and issue trillions of dollars worth of debt to fund the government.
However, the inability to sell long-term bonds due to market demand has led to a focus on short-term debt issuance, leading to higher interest expenses.
USD Liquidity Injection & its Impact on Bitcoin
Hayes concludes that time is on the side of Bitcoin believers while traditional finance faces increasing challenges. He predicts that the debt issuance by the US Treasury and the growing daily injection of USD liquidity will benefit wealthy asset holders, driving investments into risk assets like Bitcoin.
Hayes expects Bitcoin to hold its ground, with a strong support base forming as money flows into global risk asset markets. As more pundits highlight the impact of the money printing by the Federal Reserve and the US Treasury, Hayes believes it will become common knowledge that when the money printer goes “brrr,” Bitcoin experiences a boom.
Related Reading | Litecoin Gains Momentum As Halving Approaches, On-Chain Volume And Whale Activity Surge