Rising prices of Bitcoin and gold will be driven by “wartime inflation,” says former BitMEX chief Arthur Hayes. He spoke of this in his new the ‘Periphery’ essay.
In his view, the United States is actively backing new armed conflicts, including the recent clash between Israel and Palestine, which weighs on the global economy.
Meanwhile, the Fed has faced internal financial challenges, arguing that higher interest rates will curb inflation.
“If long-term U.S. Treasuries do not provide safety for investors, then their money will seek alternatives. Gold and, most importantly, Bitcoin will begin to rise due to real concerns about global inflation during wartime,” Hayes wrote.
Since the Fed meeting on September 20, long-term U.S. Treasuries have fallen 11%, and Bitcoin has risen 11%.
The former BitMEX chief added that the market has also started to worry about the growing U.S. external debt.
Separately, U.S. President Joe Biden has asked Congress for $105 billion in military and humanitarian aid for Israel and Ukraine, and for counter-narcotics and anti-money-laundering efforts.
If military actions fail for the parties backed by the U.S. government, yields on Treasuries could plunge to record lows, Hayes warned. Meanwhile, many investors have already begun selling such securities.
“If U.S. defense spending moves into an absurd regime, then trillions more dollars will have to be borrowed to fund the military machine,” the former exchange boss added.
Hayes noted that after a fake Cointelegraph report about the approval of a spot Bitcoin ETF based on the first cryptocurrency, the asset rose above $30,000. However, in his view, the pump was driven not so much by the rumors as by selling of government bonds.
In his essay, he called these events the trigger for moving to a new asset class — cryptocurrencies.
“Bitcoin is always the first stop, then Ethereum, and finally my favourite shield coins,” Hayes concluded.
Earlier, the former BitMEX CEO predicted a rise in digital gold to $1m by 2026. He justified his view by the asset’s limited supply, the prospect of approval of a spot Bitcoin ETF and geopolitical uncertainty.
Earlier, in September, he noted that since March the leading cryptocurrency has been in a bull market and, over the next 6–12 months, will deliver a new impulse.
The expert is convinced that the upcycle started after the Fed’s $25 billion bank-stabilisation program in light of ‘rescue’ of Silicon Valley Bank.