- Arthur Hayes predicts that rising geopolitical tensions and increased government spending will drive Bitcoin prices higher.
- He compares the current situation to past events that led to inflation and stronger performance for hard assets like Bitcoin.
Arthur Hayes, the former CEO of Bitmex, predicts a potential bull market for Bitcoin driven by rising energy prices and inflationary pressures exacerbated by ongoing tensions in the Middle East. In his blog post, Hayes links international relations to the money market, arguing that disruption can cause large swings in the system.
According to Hayes, growing tensions in the Middle East, especially between Israel and Iran, may have far-reaching consequences for world markets. He explained that such disruptions create threats of increased energy prices that would energize the value of Bitcoin in fiat currency terms. ‘Bitcoin is stored energy in digital form’, he said, indicating that with inflation in the price of energy, the worth of the Bitcoin also goes up.
Hayes predicts that large volumes of newly produced money will circulate in the market through government spending linked to wars. When more dollars enter the market, investors might feel the need to invest in Bitcoin due to the inflation rate.
Historical Context of Asset Performance
Hayes provides historical examples of the current global political situation and uses examples referring to the situation of the Arab oil embargo in 1973 and the Iranian revolution in 1979. Referring to his reports, he is right on track that inflation betters such as hard assets, including gold, do well during the energy crises period. Similar to gold, Hayes thinks that Bitcoin will display a similar characteristic of rising whenever there’s volatility since people will demand it more.
Even though Hayes has a positive outlook on the future of Bitcoin, he also cites geopolitical strife as a source of danger. He lists three main problem areas: physical destruction, energy price changes and regarding monetary policy. Hayes noted that there can be disruptions in various mining operations especially in locations like Iran; however, the effect shall, at long last, not be greatly felt in the Bitcoin network.
He emphasizes the historical relationship between war and inflation, stating, “We know that war is inflationary.” The U.S. government could socialize and borrow to finance its military activities, and the balance sheets of the Federal Reserve and commercial banks may expand. According to Hayes, as these institutions acquire the resulting debt by printing more money, this will, in the long run, enhance Bitcoin’s market performance
Impact of Upcoming U.S. Presidential Election
Another factor that will greatly affect the future value of Bitcoin is the upcoming American presidential election. According to Bernstein analysts, Bitcoin prices may shoot through the roof if Trump assumes office, with highs of $80k-$90k. On the other hand, if Kamala Harris, for instance, were to emerge as the winner, experts expect the value to drop lower, potentially touching the $40,000 floor.
With political uncertainty in its forecast, Hayes proceeds to warn traders about potential risks. Hayes also encourages investors to handle their stakes appropriately, especially with regard to the smaller coins, which seem to be more volatile.
Bitcoin has fluctuated in price due to events such as missile attacks on Israel and increasing tension with Iran. Subsequently, the escalation of hostilities in the Middle East pushed the cryptocurrency’s value down to $61,300, the lowest since two weeks prior. However, it has displayed some level of bounce back and was trading at $62,200 in the following trading sessions.
