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Arthur Hayes thinks a crypto bull market is coming

Should Bitcoin censor BRC 2006

Should Bitcoin censor BRC 2006

Arthur Hayes, the co-founder & CIO of the cryptocurrency and derivative trading platform BitMEX, suggests “Patience is Beautiful” in an essay dated June 1, 2023.

In his in-depth write-up, he highlights the Federal Reserve and U.S. Treasury are capitalizing on interest income from diverse facilities and debt, effectively transforming it into a new form of money printer, leading experts to believe that bitcoin’s value will remain strong.

An injection of USD liquidity

According to the BitMEX co-founder, depositors are increasingly moving their funds from non-too big to fail (TBTF) banks to TBTF banks or money market funds. This shift leads to a growth in balances within facilities like the repurchase agreement facility and the interest on required balances (IORB). 

As a result, TBTF banks find themselves with ample cash reserves, paying little to no interest on deposits and parking the surplus with the Federal Reserve, thereby contributing to the increase in the money supply.

The injection of USD liquidity into the system is expected to continue growing, with the rate of change accelerating due to the payment of interest on larger balances. This continuous injection of liquidity acts as a stimulus program, benefiting wealthy asset holders.

The essay goes on to highlight that such individuals tend to invest their excess funds in risk assets such as gold, bitcoin, and AI tech stocks. In essence, the increase in government-printed “wealth” distributed as interest further supports the demand for these assets.

Regarding bitcoin, Arthur expresses confidence in its resilience, suggesting that a retest of the $20,000 mark or a similar significant drop is unlikely. These insights shed light on the dynamics of the financial landscape and its potential implications for bitcoin’s price.

Embracing the summer decrease

Noting the typical decrease in volatility and trading volumes during the northern hemispheric summer months, the co-founder suggests many traders will disengage due to boredom, making now an opportune time to gradually increase allocation to bitcoin, particularly after the replenishment of the treasury general account (TGA).

Additionally, Hayes predicts that as more pundits discuss the massive amounts of money being printed by the Federal Reserve and U.S. Treasury and distributed as interest, it will once again become widely recognized that the money printer is operating at full throttle.

This renewed understanding of the continuous influx of fiat currency is expected to have a positive impact on bitcoin’s price, with the co-founder suggesting that when the money printer goes crazy, bitcoin tends to experience significant price growth.

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