TL;DR
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Arthur Hayes believes the grueling year of interest rate hikes we’ve just experienced should have put risky investments (like BTC) in the toilet.
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One on hand, crypto is proving to be quite resilient to changes in the traditional financial system.
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On the other hand once the Fed starts to lower interest rates and print money again (expected to happen in the next 1-2 years), a good chunk of that new money will flow into AI and crypto, pushing prices up (hoooray!) and that flow of money will then go on to “produce the 80-year biggest asset bubble that we’ve had since the Great Depression in the 1930s” (boooo!).
Full Story
Right now, Bitcoin is in its ‘Harry Potter at the end of book 7’ era.
It should be dead…but it ain’t.
At least, that’s what we took from BitMEX founder Arthur Hayes’ latest statements. Arty reckons the grueling year of interest rate hikes we’ve just experienced should have put risky investments (like BTC) in the toilet.
The basic theory being:
Interest rates go up → stuff gets more expensive → we all cut our spending on ‘nice-to-haves’ (e.g. Bitcoin) and focus on the ‘need-to-haves’ (e.g. food, shelter, a lock of Jimmy Buffet’s mustache hair for the shrine we’re building in tribute of the mayor of Margaritaville himself, etc.)
But as far as Bitcoin goes – investment isn’t drying up as expected.
And with that, Arthur has two theories. One exciting. One terrifying.
The exciting theory:
“The standard playbook is starting to break down.
Whether the Fed raises or cuts [interest rates], we’re in a good position as a cryptocurrency industry.”
I.e. crypto is proving to be quite resilient to changes in the traditional financial system.
The terrifying theory:
Right now, Arty sees three mania’s taking hold of the financial world which could lead to a massive financial collapse. They are: AI, crypto, and money printing.
The theory being that once the Fed starts to lower interest rates and print money again (expected to happen in the next 1-2 years), two things will happen:
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A good chunk of that new money will flow into AI and crypto, pushing prices up (hoooray!).
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That flow of money will then go on to “produce the 80-year biggest asset bubble that we’ve had since the Great Depression in the 1930s” (boooo!).
Let’s hope he’s only half right.
