• Artur Hayes said that the US’s military budget is set to explode amid the current Israel-Hamas conflict and will increase government borrowing placing upward price pressure on Bitcoin.
• Amid the current geopolitical development, Bitcoin shows good performance along with Gold.

In a recent development, Arthur Hayes, the co-founder of the BitMEX derivatives exchange, shared an interesting take on the actual reason behind the recent Bitcoin price rally. While many believe the Blackrock Bitcoin ETF featured on the DTCC website is the reason behind the recent rally, Hayes believes that the current Israel-Hamas conflict has more to do with this.

The BitMEX co-founder published an essay in which he attributed the recent crypto market rally to the costs associated with hawkish U.S. foreign policy rather than the anticipation of a spot Bitcoin ETF. In his essay titled “The Periphery,” published on October 24, Hayes suggested that the surge in the crypto markets was linked to U.S. President Joe Biden’s open-ended commitment to support Israel’s war effort against Hamas.

In his recent essay, Hayes said:

Added to Ukraine’s tab, America’s military budget is set to truly explode. This will increase future government borrowing, and the sky’s the limit when it comes to the sums of capital a war can waste.

Hayes noted that institutional investors have already begun divesting from bonds and treasury bills in anticipation of increased U.S. military spending, and they are now looking to invest in alternative asset classes to generate returns.

“If long-term U.S. Treasury bonds offer no safety for investors, then their money will seek out alternatives. Gold, and most importantly, Bitcoin, will begin rising on true fears of global wartime inflation,” he added.

Bitcoin Follows With Gold Rally

Hayes’ remarks follow a 19.5 percent surge in BTC’s price over the past week, with some experts linking this increase to advancements in BlackRock’s application for a spot Bitcoin exchange-traded fund (ETF). During this same period, the total market capitalization of digital assets has risen by 12.6 percent.

Hayes also observed that the price of gold has been on the rise since the Gaza conflict began. Gold has experienced an 8.6 percent increase since October 4, with its most recent price recorded at $1,975 per ounce, as reported by Market Index.

According to Bloomberg’s Senior Macro Strategist Mike McGlone, as Bitcoin exchange-traded funds (ETFs) gain traction, the decreasing popularity of gold-related ETFs may indicate a shift towards the digital alternative. While McGlone maintains a bullish outlook on gold, especially in the event of a U.S. recession, he also acknowledges that Bitcoin’s recent robust performance compared to stocks and bonds reflects its maturity and growing diversification.

Analysts continue to stay bullish on bitcoin expecting it to rally to $40,000 going ahead. Thus, any price dip would present a buying opportunity to all the long-term investors in the market. Some analysts like Credible Crypto are also expecting a $10,000 single-day price rally.