In a thought-provoking blog post, Arthur Hayes, the founder of the BitMEX crypto exchange, outlines a potential scenario that could unleash a bull cycle in the digital asset market.
Hayes believes that China’s decision to allow its citizens to invest in cryptocurrencies, combined with the current hostile climate for digital assets in the United States, could serve as the catalyst for a major market rally.
According to Hayes, the re-entry of Chinese investors into the crypto space through the financial channels of Hong Kong would reignite the market precisely when the financially strained American middle class is effectively excluded from participating.
Furthermore, Hayes predicts that the ongoing economic challenges faced by China will lead to looser monetary policies, resulting in a flow of resources into the crypto market.
As the Chinese economy weakens, credit issuance will increase, leading to a devaluation of the currency and the potential for capital flight into alternative assets such as cryptocurrencies.
Hayes argues that China’s move to reduce its holdings of Western assets will particularly benefit Bitcoin investors. By weakening its currency and permitting loyal comrades to engage in Bitcoin derivatives trading, China indirectly reduces its exposure to Western fiat assets.
This, in turn, creates a reflexive relationship where the United States must work harder to prevent capital outflows.
As China refrains from purchasing US Treasuries and holding USD assets, the demand for alternative stores of value like Bitcoin is expected to surge.
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Hayes optimistically suggests that this interplay between China’s economic decisions and the crypto market will yield significant returns for Bitcoin holders.
