BitMEX Co-Founder: Weak Yen Could Push Bitcoin Price to $1 Million

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As a crypto investor with a background in economics and a keen interest in global financial markets, I find Arthur Hayes’ theory on the potential link between the U.S. dollar, Japanese yen, and Bitcoin intriguing. The interconnectedness of monetary policies among major economies like Japan, China, and the United States, as well as their impact on exchange rates, is a complex issue that could potentially lead to significant price movements in Bitcoin.

Arthur Hayes, the co-founder of renowned cryptocurrency derivatives trading platform BitMEX, has shared an intriguing perspective on the potential relationship between the U.S. dollar and Japanese yen exchange rates, suggesting that a weaker yen could potentially push Bitcoin‘s price above $1 million.

In a recent newsletter named “The Easy Button,” Hayes, who is presently the CIO at Maelstrom, proposed that actions taken to strengthen the Japanese yen could potentially lead to an increase in Bitcoin’s price. He expressed this idea as follows:

In simpler terms, among all assets, Bitcoin has shown the best results during global fiat currency devaluation. People are aware of this. Once there’s action taken on the weak yen, I will make an educated estimation using mathematics, to predict how much money could flow into Bitcoin and potentially push its price up to $1 million or even higher.

As a crypto investor, I’ve been following Hayes’ theory closely, which centers around the monetary policies of major economies like Japan, China, and the United States. This theory emphasizes the significance of the dollar-yen exchange rate in shaping the global economy. The Federal Reserve, through Treasury orders, holds the power to swap dollars for yen with Japan’s central bank. By doing so, they can manipulate the exchange rate without having to raise interest rates, which could negatively impact the Bank of Japan.

As an analyst, I would rephrase it as follows: The BitMEX founder pointed out that this arrangement enables the Bank of Japan to bolster its yen without necessitating the sale of U.S. Treasuries. This, in turn, benefits the U.S. Treasury by keeping it from being compelled to sell and preserving low-interest rates.

According to his statement, the economic rivalry between China and Japan, notably in the realm of exports, frequently centers around pricing. If Japan’s yen weakens, China might respond by devaluing its yuan to preserve competitiveness. Consequentially, American manufacturers could be negatively impacted, potentially prompting more outsourcing.

Hayes additionally pondered the possibility that China might utilize its expanding gold hoard for backing the yuan, potentially disrupting Western financial institutions.

In response to these circumstances, Hayes proposed a hypothetical situation where the Federal Reserve engages in dollar-yen exchange to supply the Bank of Japan with necessary funds for calming the currency market, all while permitting China to persist with its monetary growth.

He proposed that such a strategy might result in the US dollar losing value and, combined with Bitcoin’s surge, could jeopardize the dollar’s role as the global reserve currency. If this hypothesis is correct, institutional investors may shift to investing in spot Bitcoin ETFs as a protective measure against the weakening of conventional fiat currencies.

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2024-05-25 02:13