Arthur Hayes believes Chinese monetary authorities might be preparing to inject money into the nation’s economy, which could lead to a surge in Bitcoin and other cryptocurrencies.
In a blog post on Monday, he stated: “Let’s take a look at how the Middle Kingdom is about to throw gasoline on the raging fire that is the incipient crypto bull market.”
Hayes outlined how a combination of factors could prompt China to “flood the world with yuan credit”, and how this influx of capital could end up boosting Bitcoin.
He suggested that the weakening of the US dollar, caused by issuing more Treasury bills, is now creating more favorable conditions for Chinese authorities to issue immense amounts of new credit to its property sector. This, in turn, is giving China the scope to dramatically increase the amount of onshore yuan credit without the currency weakening.
Hayes believes this global monetary dynamic is likely to benefit Bitcoin and the cryptocurrency market. He predicted that an influx of capital from mainland China into risk assets, including Bitcoin, would be one of the consequences.
Alongside this, he argued that with the plentiful yuan credit, the demand for dollar credit and liquidity would fall, causing all fixed supply assets such as Bitcoin and gold to rise in dollar fiat price terms.
The BitMEX co-founder concluded by saying that this forecast favors risk assets, leaving him to focus on crypto investments instead of investing in U.S. Treasury bills.
“I will continue moving money out of T-bills and into crypto because I want to get in now before it becomes apparent through the data that China’s money printer is going brrrrr,” he said.
