During the recent surge in market activity, various analysts have put forth their Bitcoin price forecasts. One of the latest predictions has been made by Arthur Hayes, who is the co-founder of BitMEX.
In a fresh piece titled “Clear or Unclear?”, Hayes explored the factors that might propel the leading cryptocurrency towards a valuation in the seven figures.
The focus of his prediction revolved around the future economic environment under the upcoming administration of Donald Trump, and the potential ramifications on traditional financial sectors, inflation, and the strength of the U.S. dollar.
Implications of Trump’s policies on the economy
In his article, Hayes hinted at the likelihood of the Trump administration adopting quantitative easing (QE) measures.
For those unfamiliar, QE is a monetary policy tool where a central bank purchases government securities to infuse liquidity into the economy, thereby reducing interest rates and encouraging borrowing and spending.
This approach of generating credit, geared towards fortifying American manufacturing and industry, is anticipated to have inflationary outcomes, consequently leading to a devaluation of the dollar.
Drawing parallels to China’s economic development strategy, Hayes labeled this debt-driven model as
“Capitalism in the American Style with Chinese Characteristics.”
Hayes’ Bullish Bitcoin Projection
But what does this mean for Bitcoin? Hayes posited that if inflation surpasses traditional investment returns, investors might increasingly turn to assets like Bitcoin.
Unlike fiat currencies that can be printed at will in response to economic pressures, Bitcoin possesses a limited supply of 21 million, rendering it inherently deflationary.
This scarcity and its autonomy from central banks amplify Bitcoin’s attractiveness as a store of value. He remarked,
“As the available supply of bitcoin decreases, a significant portion of fiat money will seek refuge not just from Americans but also from Chinese, Japanese, and Western Europeans. Take a long position and maintain it.”
Emphasizing Bitcoin’s potential as a hedge against fiat devaluation, Hayes highlighted its remarkable 400% growth since 2020.
He further elucidated that reducing the current debt-to-GDP ratio of 132% to 115% would necessitate around $4 trillion, whereas reverting to pre-2008 levels (about 70%) would demand $10.5 trillion.
According to Hayes, such expansions in credit would propel Bitcoin’s ascent, articulating,
“This sets the stage for Bitcoin to reach $1 million.”
Current State of the Bitcoin Market
Subsequent to nearing the $90,000 milestone, Bitcoin has experienced a decline. At present, it is trading at $87,577, marking a 2.63% drop from its recent all-time high of $89,940.
Data from CoinMarketCap indicates a 0.17% uptick in Bitcoin’s price over the last 24 hours, with weekly gains holding steady at approximately 17%.
Nevertheless, technical signals hint at a likely moderation. The Relative Strength Index (RSI) decreased from a previous high of 84.51 to 80.85, underscoring a potential easing of bullish momentum.
The Chaikin Money Flow (CMF) also dipped, though it remained positive at 0.31, denoting reduced capital inflows compared to recent periods.
Collectively, these indicators suggest a potential short-term slowdown or minor correction as some traders secure profits following Bitcoin’s robust weekly surge. Nonetheless, the overarching bullish trend for Bitcoin continues to display resilience.