BitMEX founder and legendary trader Arthur Hayes published the latest article "Sugar High", analyzing why the Japanese yen's interest rate hikes are insufficient, the outlook for a U.S. economic recession, and other issues. He said that entering the final stage of the third quarter of 2024, fiat currency liquidity conditions are very favorable for cryptocurrency holders. He predicted that if there is an economic recession in the United States, the Federal Reserve will increase its money printing efforts, thus driving Bitcoin to skyrocket.
Hayes noted that central banks around the world, now led by the Federal Reserve, are reducing the cost of funding. The Federal Reserve cuts interest rates amid above-target inflation, while the U.S. economy continues to grow. The Bank of England and the European Central Bank are likely to continue cutting interest rates at their upcoming meetings.
He further mentioned in the article that U.S. Treasury Secretary Yellen promised to issue $271 billion in treasury bills and conduct $30 billion in repurchases before the end of the year. This will add $301 billion in U.S. dollar liquidity to financial markets. The U.S. Treasury Department has about $740 billion left in the Treasury Account (TGA), funds that can and will be used to stimulate markets and help Harris win.
He said that to him, the price of currency is like the Snickers bars and candy bars he eats to quickly replenish glucose, which is why he titled this article "Sugar High", which is a kind of food. The high you get after a heavy dose of sugar. However, there is no medical proof that this phenomenon actually exists, and it is often considered to be just an urban legend.
Arthur continued: "The quantity of money is like a slow, long, burning 'real food'. After Federal Reserve Chairman Powell announced wage adjustments at the Jackson Hole annual meeting last Friday (August 23), the Federal Reserve finally committed to lower Policy rates. In addition, officials from the Bank of England and the European Central Bank have indicated that they will also continue to cut policy rates.”
The article also wrote: "Some people point out that historically, when the Fed cuts interest rates, the stock market will fall. Others worry that the Fed's interest rate cuts are a leading indicator of economic recession in the United States and even developed markets. This may be correct, but if the Fed cuts interest rates when inflation is high, Cut interest rates when economic growth is strong."
"Imagine what they would do if there was a real recession in the U.S.," he said. "They would increase their printing of money and significantly increase the money supply. That would lead to inflation, which could be bad for certain types of businesses. But for companies like For an asset with limited supply like Bitcoin, this is going to be a meteoric trip to the moon.”
Regarding the Bank of Japan, he explained: “The Bank of Japan raised interest rates by 0.15% at the meeting on July 31, 2024. Afterwards, it was very worried about the speed of the appreciation of the yen, so it publicly stated that future interest rate increases will take into account market conditions. That's a euphemism for 'if we thought the market was going to go down, we wouldn't raise rates.'"
Arthur concluded by mentioning that entering the final stage of the third quarter, fiat currency liquidity conditions could not be better.
Brian
Weiliang
Joy
Miyuki
Alex