Arthur Hayes: Recent Crypto Rally Driven by Global Wartime Inflation Fears
According to Arthur Hayes, co-founder of BitMEX, the recent rally in the crypto market is not solely due to anticipation of a Bitcoin ETF. In his essay titled “The Periphery,” Hayes attributes the surge to the costs associated with hawkish U.S. foreign policy, specifically related to Israel’s war effort against Hamas.
Hayes points out that U.S. President Joe Biden’s commitment to supporting Israel’s war effort, along with an escalating military budget and increased government borrowing, has raised concerns about global wartime inflation. He believes that institutional investors, anticipating expanded U.S. military expenditure, have started selling off bonds and treasury bills and are seeking alternative asset classes for returns.
Institutional Investors Seek Alternative Asset Classes
Institutional investors are turning away from long-term U.S. Treasury bonds and looking at alternatives like gold and Bitcoin for safety and potential returns. Hayes suggests that both gold and Bitcoin will experience a rise driven by genuine fears of global wartime inflation.
He mentions that Bitcoin briefly spiked above $30,000 on false rumors of SEC approval for a Blackrock spot Bitcoin ETF. However, he argues that the recent rally in Bitcoin and gold is not solely based on ETF speculation but rather reflects the market’s anticipation of a future inflationary global world war situation.
Bitcoin Price Surge and Gold Rally
Hayes’s analysis comes as Bitcoin sees a 19.5% surge in just seven days, leading some to attribute the rally to progress on BlackRock’s Bitcoin ETF application. The overall market capitalization of digital assets has also increased by 12.6% during the same period.
Hayes highlights that gold has also been rallying since the conflict in Gaza began, with an 8.6% increase since earlier this month. While the anticipation of a Bitcoin ETF may have played a role in the recent market rally, Hayes suggests that fears of global wartime inflation, driven by increased military expenditure, are also contributing to the surge in Bitcoin and gold prices.
Hot Take: Global Wartime Inflation Fuels Crypto Market Surge
The recent rally in the crypto market is not solely driven by expectations of a Bitcoin ETF. Instead, Arthur Hayes argues that it is fueled by concerns about global wartime inflation caused by hawkish U.S. foreign policy and increased military expenditure. Institutional investors are selling off bonds and treasury bills, turning to alternative asset classes like gold and Bitcoin for safety and potential returns. The surge in Bitcoin and gold prices reflects genuine fears of global wartime inflation rather than mere speculation on ETF approval. This analysis coincides with Bitcoin’s 19.5% surge in seven days and a 12.6% increase in overall digital asset market capitalization.
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