Fed chairperson Jerome Powell is facing criticism for his approach to tackling inflation in the US. BitMEX founder Arthur Hayes disagrees with Powell’s strategy and highlights the differences in economic and monetary conditions between now and the 1980s. Hayes argues that the Federal Reserve is destined to fail if it continues with the same playbook, especially considering the current debt profile is four times larger than it was 40 years ago.
Hayes believes that the flaws in the fiat banking system present an opportunity for cryptocurrencies like Bitcoin. In his recent blog post titled ‘Kite or Board,’ he points out that the Federal Reserve’s plan to tighten monetary policy by raising interest rates and reducing its balance sheet will primarily benefit wealthy asset holders. Hayes emphasizes that Bitcoin’s value proposition lies in its ability to counteract a fiat system that he describes as “flawed, corrupt, and parasitic.”
The former BitMEX CEO also criticizes the US fixed-income markets, claiming that they are no longer free. He blames the entity overseeing the space for having the power to print money at will and unilaterally change banking and financial rules. Hayes warns against fighting the Fed, stating that those who do so will face consequences.
Despite the recent sell-off and bearish pressure on Bitcoin, Hayes has a different prediction for the cryptocurrency’s price. While many expect a break below $20,000, Hayes believes that Bitcoin will continue to trade around $25,000 in the third quarter of the year. He suggests that the ability of cryptocurrencies to weather the storm will depend on the amount of interest income seeking new investment opportunities.
Hayes concludes by stating that the Federal Reserve and US Treasury are injecting billions of dollars into the economy each month, and some of this money will flow into tech stocks and cryptocurrencies. He believes that despite concerns of a sharp correction in crypto prices, there is a significant amount of cash that needs a home in finite-supply financial assets like crypto.
In summary, Arthur Hayes, the founder of BitMEX, criticizes the Federal Reserve’s approach to monetary policy and highlights the flaws in the fiat banking system. He sees Bitcoin as an antidote to this flawed system and predicts that it will continue to trade around $25,000 in the coming months. Hayes suggests that the influx of cash from the Federal Reserve and US Treasury will benefit cryptocurrencies and tech stocks.
