The former BitMEX CEO Arthur Hayes believes there’s a financial crisis coming and in our latest cryptocurrency news we are finding out why.
The former BitMEX CEO urged the readers to put their feelings about Ukraine and Russia aside and recognize the heavy consequences that the sanctions will bring. Last week, Credit Suisse made a radical prediction which is that the dollar’s era as the world’s reserve currency is coming to an end and that commodity money like gold will replace it.
This week, the now-former BitMEX CEO and co-founder Arthur Hayes believes that billions of dollars will flow into gold and BTC in the next ten years but he is also certain that the financial crisis and hyperinflation of the dollar will ensue. As explained in his blog post, the freezing of $600 billion in Russin foreign reserves will shake other world’s government’s trust in storing the value in US treasuries and China in particular, with a surplus of $273 billion will no longer use it to grow its fiat currency position.
Hayes’ calculations predicted that China and other trade surplus nations will look to gold and some other commodities to bring in $967 billion in value annually which used to belong to fiat. By contrast, this will weaken the strength of the US dollar which combated high inflation as of late. The phase shift will be a mess and it will be volatile but it will be inflationary in fiat currency terms. The Federal Reserve ended its US Treasury Bond purchase program to avoid surging prices in the nation but as the countries move their wealth away from bonds into commodities, the fED will have to buy US bonds again and finance its debt.
The US runs a $600 billion account deficit each year to sell $2.8 trillion worth of bonds to pay for the deficit in 2021. the FED will not be able to do much either because the interest rate hikes will not do anything to make the US bonds more attractive to nations around the world but they will cause a recession as well. Though BtC is often referred to as digital gold by investors, Hayes said that he is no maximalist but BTC trades more like a tech stock than a safe-haven asset. The world still doesn’t recognize its hard money properties and governments will split most of their money into physical gold.
This doesn’t mean that the digital gold doesn’t benefit with Hayes remaining confident that if the new gold era takes place, some central banks will conduct trades in BTC rather than shipping gold across the world:
“Again, I am fully confident that on a personal level if you believe you should spend fiat and save gold, the mental leap towards spending fiat and saving Bitcoin is minuscule.”
