Key Facts: Investor warns that further devaluation of the US dollar is coming. Bitcoin maintains its superiority over gold as an investment, says Hayes. Co-founder and former CEO of cryptocurrency exchange BitMEX, Arthur Hayes, offers his perspective on investment options in the current context of the bitcoin (BTC) market, the global monetary and geopolitical situation. Hayes argues that we are at an “inflection point,” where A paradigm shift is taking place in the world order. According to him, this change is characterized by a transition from one global monetary and geopolitical arrangement to another, still uncertain in its details. “This will focus on the Pax Americana because the entire global economy is a derivative of the financial policies of the ruling empire,” he indicates on his blog, where he reflects on the global financial situation. The Pax Americana, also known as the American Peace or the Long Peace, is a term used to describe the period of relative global peace and stability that has prevailed since the end of World War II in 1945, when the United States emerged as the world's dominant economic, military, and cultural power. Michael Harris, a market analyst and author of books specializing in financial analysis, shares Hayes' view. Harris also predicts the arrival of a new international political model which will trigger a financial collapse. «China is challenging the US's hegemonic position in the world, both economically and militarily,» he said.
3 investment strategies proposed by Hayes
Given this scenario of changes, Hayes proposes three investment strategies. The first is to invest in stocks, which is recommended “if you believe in the current system but not in those who govern it.” The second is to invest in US Treasury bonds, “if you believe in both the system and those who govern it.” Finally, he suggests investing in bitcoin (BTC) or gold, “if you believe in neither the system nor those who govern it.” Hayes argues that Government stocks and bonds are vulnerable to government decisionswhile bitcoin and gold are more resilient assets in comparison. Over the past four years, the NASDAQ index and the price of bitcoin have moved almost in unison, as seen in the chart below. However, BTC has been stagnant since hitting a new all-time high last Marchwhen it reached $73,000, as reported by BitcoinDynamic. Despite the fall in the price of the currency, Hayes continues to believe in the strength of bitcoin.
Nasdaq index (white) and bitcoin (yellow) over the past four years. Source: Arthur Hayes. The investor highlights Bitcoin's superiority over gold due to its transaction speed and decentralized nature.
When compared [a bitcoin] With digital fiat money, which also moves at the speed of light, but governments can print it in infinite quantities, bitcoin is superior, while gold is inferior. That is why bitcoin stole some of the limelight from gold from 2009 to the present Arthur Hayes, co-founder and former CEO of BitMEX.
The impact of fiscal policy and inflation on bitcoin
Hayes notes that inflation and geopolitical tensions are in Bitcoin's favor. He therefore claims that a «devaluation» of fiat money and a possible shortage of credit will boost the price of digital currency and cryptocurrenciesThis is because bitcoin has matured as a financial asset and the market, in general, is understanding its properties as hard money, beyond seeing it as a speculative investment. The following graph shows how the price of bitcoin has increased since 2011:
Bitcoin price since 2011 – Source: TradingView. Hayes also analyzes the impact of US fiscal policy on the economy. He argues that Excessive government spending will prevent a recession, but at the cost of higher inflation. «Fiscal and monetary conditions are loose and will remain loose.» Therefore, Hayes recommends holding bitcoin as the best way to preserve wealth in the current environment.
The Bitcoiner believes that the devaluation of fiat currencies and the centralization of credit through the American banking system are factors that will favor crypto assets in the future.