BitMEX co-founder Arthur Hayes has provided an analysis on why Bitcoin’s price experienced a sudden surge this week. Hayes believes that now is the opportune time for crypto traders to move away from US Treasuries and invest in Bitcoin.
Contrary to popular belief within the crypto community, Hayes argues that Bitcoin’s rally this week was not due to excitement surrounding the potential approval of a US spot Bitcoin ETF. He explains that such excitement already occurred last week in response to false rumors, causing Bitcoin‘s price to drop back to $27,000 once the rumor was debunked.
Hayes attributes Bitcoin’s recent surge to the aggressive selloff in long-end US Treasuries, along with gold. He states, “This isn’t speculation as to an ETF being approved – this is Bitcoin discounting a future, very inflationary global world war situation.” Bonds are being sold off in response to statements from the Federal Reserve and President Joe Biden. The Fed signaling the end of its interest rate hiking cycle removes the incentive for holding long-end bonds. Additionally, Biden’s call for continued support of overseas conflicts has led to doubts among bondholders regarding the government’s ability to fund such efforts.
Investors have turned to gold as a safe-haven asset, causing its value to rise. Bitcoin, often compared to gold due to their shared monetary properties, has also experienced an increase in value. Hayes explains, “Gold nor Bitcoin yield anything. Therefore, if they are rallying while US Treasury yields spike, that tells me that both safe haven assets are discounting a future of more government spending and more inflation.”
Hayes has previously advocated for buying US Treasuries due to their high yield rate. However, he now believes it is time to rotate out of short-term US Treasury bills and into crypto. Biden’s commitment to “another open-ended conflict” serves as the trigger for Hayes to return to investing in Bitcoin. He concludes, “The perfect setup is usually staring you right in the face, and you are just too preoccupied with the past to notice.”
It is important to note that this analysis and recommendation come from Arthur Hayes, co-founder of BitMEX, and should be considered within the context of his expertise and experience in the crypto industry.
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