Arthur Hayes, the co-founder of BitMEX, has hinted {that a} cryptocurrency bull run could also be on the horizon. In a latest weblog submit, Hayes mentioned the implications of the Federal Reserve’s (Fed) new Financial institution Time period Funding Program (BTFP), which he says stands for “Purchase The Fucking Pivot.” Hayes argues that the BTFP program is just Yield Curve Management (YCC) repackaged in a brand new, shiny, and extra palatable format.
Hayes predicts that the Fed’s $4.4 trillion quantitative easing (QE) program, coupled with its low-interest charges, will create a major inflationary atmosphere. This, in flip, will doubtless drive extra buyers to allocate their capital to cryptocurrencies, that are seen as a hedge towards inflation. Hayes means that the continued COVID-19 pandemic, coupled with the Fed’s financial insurance policies, will proceed to drive curiosity in cryptocurrencies.
The US Federal Authorities’s choice to extend its fiscal deficit in response to the pandemic has already been extremely inflationary, as the federal government has dropped cash immediately into folks’s financial institution accounts. The price of funds for asset speculators has dropped to zero, encouraging risk-taking, and the Bull Market has performed a major position within the monetary increase that adopted.
Fed’s Tightening Cycle and Cryptocurrencies
Banks have been contributing to the unfold of rates of interest by depositing cash with the Fed and incomes curiosity on extra reserves. This has led to a rise in curiosity danger, that means that the highest-rated credit score one can spend money on is the debt of the US authorities.
Many banks have taken measures to extend their earnings by taking up some stage of credit score and/or length danger. Nevertheless, this may result in a lower within the worth of bonds because of the elevated danger of corporations not paying their payments.
Hayes believes that the Fed’s tightening cycle may trigger a major monetary disturbance, adopted by a resumption of cash printing. He predicts that the Fed will proceed to hike till they break one thing, and a few analysts have maintained {that a} disruption in some a part of the US monetary system in 2023 will pressure the Fed to reverse the tightening cycle. Hayes argues that this could possibly be the catalyst for a crypto bull run.
Inflation and Cryptocurrencies
Hayes means that the continued COVID-19 pandemic, coupled with the Fed’s financial insurance policies, will proceed to drive curiosity in cryptocurrencies. The Fed’s $4.4 trillion quantitative easing program, coupled with its low-interest charges, will create a major inflationary atmosphere. This, in flip, will doubtless drive extra buyers to allocate their capital to cryptocurrencies, that are seen as a hedge towards inflation.
