BitMEX founder Arthur Hayes wrote in an article today that the cryptocurrency bull market is reawakening and is about to pierce the extravagant lies of central bank governors. He suggests going long on Bitcoin and then going long on altcoins. This article is sourced from a piece by Arthur Hayes, translated by MarsBIt, and organized by Bitpush.
In the previous context, Arthur Hayes predicted that the US-Japan currency swap will trigger a surge in the cryptocurrency market, with Bitcoin hitting $1 million.
The US dollar to Japanese yen exchange rate is the most important macroeconomic indicator, as I wrote in a previous article, measures need to be taken to strengthen the yen. My proposed solution is for the Federal Reserve to swap unlimited newly printed US dollars with the Bank of Japan (BOJ) in exchange for yen.
This way, the Bank of Japan can provide unlimited dollar firepower to the Japanese Ministry of Finance (MOF) to buy yen in the global foreign exchange market.
While I still believe in the effectiveness of this solution, the central bank scammers responsible for the “G7 fools” seem to have chosen to make the market believe that over time, the interest rate differential between the yen and the dollar, euro, pound, and loonie will narrow. If the market believes in this future state, they will buy yen and sell all other currencies, mission accomplished!
In order for this magic to work, the “high-rate” central banks of the G7 countries (Federal Reserve, European Central Bank, Bank of Canada, and Bank of England) must lower interest rates.
It is worth noting that the Bank of Japan’s policy rate (green) is 0.1%, while other countries’ policy rates are 4-5%. The interest rate differential between domestic and foreign currencies fundamentally drives the exchange rate. From March 2020 to early 2022, all countries were playing the same game. As long as you don’t go out with a cold, inject mRNA heroin, everyone can make money for free.
When inflation shows up in such a huge way that the elites cannot ignore the pain and suffering of the common people, the central banks of the G7 countries, except for the Bank of Japan, have actively raised interest rates. The Bank of Japan cannot raise interest rates because it holds over 50% of the Japanese government bond (JGB) market. As interest rates fall, Japanese government bond prices rise, making the Bank of Japan appear solvent.
However, if the Bank of Japan allows interest rates to rise, leading to a decline in the Japanese government bonds it holds, this highly leveraged central bank will suffer catastrophic losses. I did some terrible math calculations in the “Easy Button” for readers.
Therefore, if the “bad woman” Yellen in charge of the G7 decides to narrow the interest rate differential, the central banks with “high” policy rates will only have the option to lower interest rates. According to orthodox central bank thinking, lowering interest rates is a good thing if the inflation rate is below target. What is the target?
For some reason, I don’t know why, the inflation target of the central banks of the G7 countries is 2%, regardless of cultural, growth, debt, population, and other differences. Is the current inflation rate rapidly exceeding 2%?
Each colored line represents the inflation target of different central banks in the G7. The horizontal line is set at 2%. No G7 country’s government has published manipulated, dishonest inflation statistics below the target value. Wearing my technical analysis hat, it seems that the inflation rate of the G7 countries is forming a regional bottom in the range of 2-3% and will then explosively rise.
Considering this chart, orthodox central bank governors would not cut interest rates at the current level. However, this week, the Bank of England and the European Central Bank lowered interest rates despite inflation being above the target. This is strange. Does financial turmoil lead to the need for cheaper currency? Not really.
The issue lies with the weak yen. I believe the “bad woman” Yellen has stopped the interest rate hike performance. It is time to start maintaining the US-led global financial system. If the yen does not strengthen, the Chinese will release the dragon of yuan devaluation to match their main export competitor Japan’s super-cheap yen. In this process, US Treasury bonds will be sold, and if this happens, the American Association of Great Harmony will be in trouble.
Next, the G7 will hold a meeting a week later. The post-meeting statement will be of great interest to the market. Will they announce some coordinated currency or bond market manipulation action to strengthen the yen? Or will they remain silent but agree that everyone except the Bank of Japan should start cutting rates? Stay tuned!
The biggest question is whether the Federal Reserve will start cutting rates as the US presidential election approaches in November. Typically, the Federal Reserve does not change course near an election. However, typically, favored presidential candidates do not face potential prison disaster, so I am prepared to be flexible with my thoughts.
If the Federal Reserve starts cutting rates at the upcoming June meeting, and their favored manipulated inflation indicator is above the target, the USD/JPY will drop significantly, meaning the yen will strengthen.
I don’t think the Federal Reserve is ready to cut rates because the slow-starting Joe Biden is being questioned in opinion polls due to rising prices. It is understandable that Americans are more concerned about whether their vegetables are more expensive than the cognitive abilities of vegetables running for re-election. To be fair, Trump is also a vegetable because he likes to eat McDonald’s fries while watching “Shark Week.” I still think cutting rates is political suicide. My fundamental view is that the Federal Reserve will stand still.
On June 13, while these second-rate players sit down to enjoy a lavish meal paid for by taxpayers, the Federal Reserve and the Bank of Japan have already held their policy meetings for June. As I previously mentioned, I expect the Federal Reserve and the Bank of Japan not to change monetary policy. The Bank of England will hold a meeting shortly after the G7 summit ends, and although it is widely believed that they will maintain policy rates, given the rate cuts by the Bank of England and the European Central Bank, I think they will unexpectedly lower policy rates. The Bank of England will not incur any losses. The Conservative Party will be beaten to the ground in the next election, so there is no reason to disobey the orders of the former colonial rulers to suppress inflation.
Helicopter Money
The June central bank drama, kicked off with rate cuts by the Bank of England and the European Central Bank this week, will push cryptocurrencies out of the summer doldrums in the Northern Hemisphere. This is not the fundamental situation I expected. I thought the fireworks would start in August, around the time of the Jackson Hole Symposium hosted by the Federal Reserve. That is usually the place where sudden policy changes are announced as we enter the fall.
The trend is clear. Central banks around the world are starting a loose cycle.
We know how to play this game. Since 2009, we have been playing this damn game, when our savior Satoshi Nakamoto gave us the weapon to defeat the TradFi devil.
Go long on Bitcoin, then it’s shitcoins.
In comparison to my baseline, the macroeconomic situation has changed. Therefore, my strategy should also change accordingly. For the Maelstrom investment portfolio project, they have sought my advice on launching tokens now or later. My advice is: “Launch it damn it!”
As for my excess liquidity in encrypted synthetic US dollars (also known as Ethena’s USD (USDe)), it is earning some hefty annual interest rates, and now is the time to redeploy it into shitcoins of belief. Of course, after I buy, I will tell readers what they are. But I just want to say that the cryptocurrency bull market is awakening and is about to skin and bone the extravagant central bankers.