BitMEX founder Arthur Hayes wrote on the 1st that the world is in a new, highly localized inflation cycle centered on nation-states. Against the backdrop of massive fiscal deficits and a loose monetary environment, he is confident in Bitcoin, believing it to be the best way to protect wealth.
(Background:
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(Supplementary Background:
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BitMEX founder Arthur Hayes wrote on the 1st that the global economy and geopolitical situation are undergoing profound changes. Although the future is full of uncertainties, including which economic model will end, which country will lead the future, and what the trade finance structure will specifically look like, he is confident that the process of change has shown a clear general direction.
A new round of inflationary economic cycle has arrived
According to Arthur Hayes, historically, there have been two types of periods: local periods and global periods. During periods of local inflation, one should hold gold and avoid stocks and bonds, while during periods of global deflation, one should hold stocks and avoid gold and bonds.
In Arthur Hayes’ view, we are now in a new, highly localized inflation cycle centered on nation-states. This cycle is characterized by countries prioritizing their own interests, high inflation, and governments once again using financial repression on their own depositors to finance wars.
Bitcoin is the best way to protect wealth
Under this cycle, talking about the U.S. economic situation, Arthur Hayes said that according to the latest forecasts, due to significant government spending, the U.S. fiscal year 2024 budget deficit will surge to $1.915 trillion, a historic high. This is good news for those worried that President Biden would not sustain U.S. economic vitality through more spending before the election.
Additionally, Arthur Hayes pointed out that the Atlanta Federal Reserve predicts that the U.S. real GDP growth rate for the third quarter of 2024 will be as high as 2.7%. For those worried about a U.S. recession, when the government spends more than $2 trillion beyond its tax revenue, a recession is extremely difficult unless faced with a global financial crisis similar to that of 2008-2009.
Arthur Hayes emphasized that he listed these figures to prove that the fiscal and monetary situation is loose and will continue to be loose. In the context of global inflation, Bitcoin has performed particularly well, not only surpassing stocks but also effectively resisting fiat currency depreciation. Therefore, holding cryptocurrencies is the best way to protect wealth.
Arthur Hayes concluded that the current situation will be similar to the 1930s-1970s. With the continued expansion and concentrated distribution of bank system credit, traditional currencies may face depreciation risks. He advises investors to transfer funds from the fiat currency system to cryptocurrencies, firmly believing that Bitcoin will shine again.
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