BitMEX Founder Arthur Hayes: Bitcoin to Outperform Bonds During War Times, Despite Initial Sell-Off
BitMEX founder Arthur Hayes believes that Bitcoin will outperform bonds during times of war, despite a potential initial sell-off.
In a recent Medium post, Hayes discussed his observations regarding the net of RRP (Reverse Repo) and TGA (Treasury General Account) as indicators of dollar liquidity in the markets.
Based on these factors, he plans to adjust his pace of T-bill sales and Bitcoin purchases accordingly.
“But I will stay nimble and flexible. The best-laid plans of mice and men have a tendency to falter.”
Price of Oil and War in Middle East Are Ultimate Wildcards
In the article, Hayes noted the unpredictable nature of global events and acknowledged the ultimate wildcard: the price of oil and the ongoing conflict between Hamas and Israel.
If Iran becomes involved in the war, there could be disruptions to the oil supply, causing political difficulties for the Federal Reserve (Fed) in maintaining a hands-off monetary policy approach.
In such a scenario, the Fed might need to raise interest rates to counter higher oil prices.
On the other hand, a recession resulting from the war and increased energy prices could provide justification for the Fed to lower rates.
This uncertainty could initially lead to a sell-off in Bitcoin, although historically, Bitcoin has demonstrated its ability to outperform bonds during times of war.
He expresses his intention to buy dips even if there is initially weakness in Bitcoin due to the heightened uncertainty.
Hayes Believes Yellen’s Efforts to Manage RRR Will be Temporary
Hayes also commented on the actions of US Treasury Secretary Janet Yellen, suggesting that her efforts to manage the RRP drawdown will only be temporary.
He argued that the concerns surrounding the US Treasury market, which caused significant fluctuations in yield spreads, will resurface and put strain on the financial system.
Hayes implied that Bitcoin will once again serve as a real-time indicator of the health of the war-time fiat financial system.
In a somewhat cynical tone, Hayes briefly mentions the possibility of peace and global harmony being embraced by those in power, but dismisses it as an unlikely scenario.
He suggested that war has been a constant element in the history of the United States since its founding in 1776, indicating a lack of optimism for a significant shift in the future.
He highlighted the open-ended commitment of U.S. President Joe Biden to support Israel’s war effort and pointed out that this, along with the escalating military budget and increased government borrowing, has fueled concerns about global wartime inflation.
“Added to Ukraine’s tab, America’s military budget is set to truly explode – especially if Hamas’ allies, such as Iran, respond by entering the fray via its proxies,” the crypto veteran wrote.
“This will increase future government borrowing, and the sky’s the limit when it comes to the sums of capital a war can waste.”