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BitMEX Founder: Federal Reserve, Bank of Japan Will Push Bitcoin to $1 Million

Key Takeaways

  • Arthur Hayes predicts that the Federal Reserve and Bank of Japan will drive Bitcoin’s price to $1 million through their monetary policies;
  • Hayes emphasizes the importance of the dollar-yen exchange rate, suggesting that its fluctuations could lead central banks to increase the global money supply;
  • He argues that the BOJ might use an unlimited US dollar swap line to stabilize the yen, a move that would result in extensive money printing, typically boosting Bitcoin prices and other assets.
BitMEX Founder: Federal Reserve, Bank of Japan Will Push Bitcoin to $1 Million

BitMEX co-founder Arthur Hayes predicts that the Federal Reserve and Bank of Japan (BOJ) will influence Bitcoin’s price surge to $1 million.

This prediction hinges on these central banks’ potential actions to address Japan's currency challenges.

In an essay published on May 20, Hayes emphasized the critical role of the dollar-yen exchange rate, describing it as "the most important global economic variable." He argues that fluctuations in this rate could compel central banks to expand the global money supply dramatically.

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The situation, Hayes explains, is deeply tied to China, which loses from yen’s devaluation. A weaker yen compared to a stronger yuan could hurt China's export competitiveness. If the yen continues to weaken, China might respond by devaluing the yuan to maintain its edge in global markets.

Japan, a major competitor in automotive exports, benefits from a devalued yen, making its goods cheaper on the international market. This scenario puts pressure on China, leading Hayes to believe that China might push the US to intervene and strengthen the yen.

However, Hayes notes that the BOJ faces challenges in using traditional methods, such as raising interest rates, to strengthen the yen:

The BOJ would meltdown faster than Sam Bankman-Fried on a witness stand if they were to raise rates.

Raising rates could devalue Japanese government bonds, of which the BOJ owns 50%. This situation would force local banks and pension funds to buy government debt, necessitating the sale of US Treasuries and stocks, conflicting with American interests.

Instead of raising rates, Hayes suggests that the BOJ will use the “easy button”—an unlimited US dollar swap line with the Federal Reserve. This mechanism allows the BOJ to swap yen for dollars at a set rate, effectively costing them nothing as they can print more yen. The BOJ can then use these dollars to buy yen, strengthening their currency and weakening the dollar.

Hayes asserts that such monetary policies, characterized by extensive money printing, generally boost Bitcoin prices and other assets.

When something is done about the weak yen, I will mathematically guestimate how flows into the Bitcoin complex will ratchet the price to $1 million and possibly beyond.

Overall, central banks' actions to address currency challenges, such as those predicted by Hayes, could lead to significant increases in Bitcoin’s price.

Speaking of, Bitcoin recently surged past $71,000 again, currently trading at $69,896.34.

Aaron S., Editor-In-Chief
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.

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