As the crypto market continues its rally, BitMEX co-founder Arthur Hayes has made an intriguing prediction. Arthur asserts that Trump’s return to office could potentially trigger a decline just as his previous actions spurred a rise in the crypto market.
Arthur Hayes said, “The market will instantly wake up to the reality that Trump has at best one year to enact any policy changes on or around January 20th.” He added, “This realization will lead to a vicious sell-off in crypto and other Trump 2.0 equity trades.”
Trump has one year to act because most US elected legislators start campaigning at the end of 2025 for the November 2026 mid-term US elections.
Some of y'all don't believe Trump is about to trash the $ and print money. $BTC disagrees. Here is #Bitcoin leading vs. my new money supply indicator US Bank Credit. The market is speaking, listen up.
— Arthur Hayes (@CryptoHayes) November 10, 2024
More explanation in my essay "Black or White" that drops tom. pic.twitter.com/wsSVUK0RH2
Trump’s victory has heightened expectations for a significant shift in crypto legislation. This is because the former president promised to do “something great with crypto,” including establishing a national strategic reserve of Bitcoin.
However, Arthur Hayes provides reasons why Trump’s pledges may not be realistic.
Limited time for Trump to focus on an AOB-like crypto
According to the Maelstrom CIO, Trump has one year to show progress on some of his goals to help Republicans keep the House and Senate. Arthur stated that the majority of elected legislators, including the entire House of Representatives, commence their campaigning for the midterm elections in November 2026 at the end of 2025.
Therefore, he granted Trump one year to implement policy changes.
Hayes stated, “Fixing the underlying domestic and international issues that negatively affect them would take even the most astute and powerful politicians over a decade, not just one year.”
The crypto industry is not one of Trump’s most important objectives once he enters office.
Arthur Hayes doubts Bitcoin’s strategic reserve possibility
Hayes shared his thoughts that politicians would rather spend newly created dollars on goodies for the population to ensure their victory in the next soon-to-be-held election than on Bitcoin.
He explained that the US keeps more gold than any other country. This shows that the US is financially stronger than all other countries, both online and offline. Therefore, if the US government devalues gold to make more dollars and then buys Bitcoin with some of those dollars, the value of Bitcoin will go up.
He also stated, “The easy button is always the first thing politicians do. If the price of gold goes up to $20,000 an ounce, how does that affect the prices of Bitcoin and other crypto?”
He concluded, “I still don’t believe the BSR will happen.”
However, Arthur Hayes claimed that although he doesn’t think the US government will buy Bitcoin, his opinion remains that the price will still go up. He explained that, in the end, a drop in the value of gold provides dollars that need to be spent on real goods and services and financial assets.
He further explained that Bitcoin is limited in quantity and fewer coins are being used. Therefore, the price of Bitcoin will rise faster than the rate at which the global supply of dollars grows.
Lastly, Hayes predicted that the value of the dollar would go down in the first half of 2025.
How bad could it get – The crypto market lately
Bitcoin rose over 50% since Trump’s win, bringing its price from around $68,000 to a record-high of $108,135. However, Arthur Hayes’s prediction of a crypto market collapse further lowered sentiments, resulting in a nearly 3% decline in the global crypto market cap to $3.64 trillion today.
Today, Bitcoin’s price experienced a 2.5% decline to $104,140, following its recent ascent to its all-time high of $108,268.45 within the past 24 hours.
Also, the recent Ethereum price surge has experienced a 3.4% drop, settling at $3,878, just a day after it briefly surpassed the $4K threshold. Cardano experienced a 4% pullback, and XRP saw a 1% decline.
In addition, Dogecoin experienced a decline of nearly 4%, settling at $0.3845. Shiba Inu experienced a decline of approximately 5%, while Pepe coin saw a more significant retreat of over 7% in the past 24 hours.
Arthur has additionally shown Trump’s hand in how nations are shaping their economies to fold into what could make POTUS happy.
Arthur Hayes adds, “Even before Trump reascends the throne, countries are acting in ways I predicted, further enhancing my confidence about how money will be printed and the methods by which financial repression shall be enacted.”
Xi Jinping, China, and crypto
It would be foolish to ignore the economic power that comes with China. China’s economy and the policies it adopts have set a stage for the global economy to work under. During “sleepy Joe’s and Bidenomics” tenure, China, under the emblem of BRICS, has grown to a stature that should worry America.
However, Arthur Hayes believes that Xi Jinping has two big problems that he needs to solve. President Xi needs to generate jobs for the over 20% of educated youth who are unemployed and stop property prices from declining.
Then again, Trump is coming in with tariffs. What are the weapons at Xi’s disposal? According to Hayes, “China must engage in QE and, by extension, allow the yuan to float freely.”
He adds “For those of you who are puzzled as to why the yuan must weaken because of QE, remember that QE expands the supply of yuan. If the yuan supply grows faster than another fiat currency, then mathematically, it weakens compared to that currency.”
The question that crypto investors should be pondering is how wealthy Chinese investors will react to the signals that the PBOC will crank up the growth in the supply of yuan. Arthur ponders:
Will capital flight through various legal channels in Macao (casinos) and Hong Kong (HK registered companies with Chinese owners) be allowed to operate normally, or will Xi shut them down to sequester capital onshore?
Arthur Hayes
According to Arthur Hayes, “For crypto, at least in the short term, Chinese capital will flow out through Hong Kong into dollars and purchase Bitcoin and other shitcoins. In the medium term, once Xi reciprocates and bans Chinese capital from escaping through the liquid and obvious channels, the question is whether Hong Kong crypto ETFs will be allowed to accept southbound capital flows from Mainland Chinese investors.”
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