(VOR News) – The co-founder of BitMEX, Arthur Hayes, believes that the cryptocurrency Bitcoin (BTC) will experience a significant increase as a result of the intensification of international hostilities.
Over time, this will lead to increased spending by the government as well as inflation.
It was suggested by Hayes in a blog post that the financial response of the United States government to the events that occurred in the Middle East will result in the printing of money and will be the driving force behind the next increase in the price of Bitcoin.
“We know war contributes to Bitcoin inflation.
According to Hayes, “to the best of our knowledge, the United States government requires financing in order to complete the sale of arms to Israel.”
It is common knowledge that the commercial banking sector in the United States and the Federal Reserve will purchase this debt by printing money and growing their balance sheets on their respective balance sheets.
Because of this, we are aware that as the conflict becomes more intense, Bitcoin will experience a significant increase in terms of fiat currency.
It has been observed by Hayes that global conflicts, particularly those that involve the United States, have a tendency to result in a growth of the financial system.
Due to the fact that Bitcoin is a decentralized asset, he believes that it has the potential to benefit from the increased number of dollars that are entering the economy as a result of the government’s debt. This is because investors are looking for ways to protect themselves from inflation.
In the event that there is an increase in the level of conflict in the Middle East, there will be no destruction of any important physical infrastructure that supports cryptography. As long as the cost of electricity remains too high, the value of Bitcoin and other cryptocurrencies will continue to rise.
The argument that he presented was that the newly minted money, which might amount to hundreds of billions or potentially trillions of dollars, will breathe new life into the Bitcoin bull market.
Hayes provided two historical examples of how hard assets, such as gold, perform well in conditions of energy problems and growing inflation.
These examples include the Iranian revolution of 1979 and the Arab oil embargo of 1973. He asserted that Bitcoin, which is popularly referred to as “digital gold,” will behave in a manner that is comparable to the current environment.
In the event that energy infrastructure is destroyed, such as oil fields or the Strait of Hormuz, Hayes indicates that there is a possibility that energy costs will skyrocket. This warning is issued as the level of animosity between Israel and Iran continues to rise with each passing day.
He believes this will boost Bitcoin’s worth as “stored energy in financial markets.”
On the other hand, he warned traders to be prepared for volatility and implicitly suggested that cryptocurrency markets would see setbacks if the conflict continues to destabilize global markets.
Hayes said that, in light of the uncertainties, he has reduced his exposure to other cryptocurrencies that are not as well-known. “The name of the game is sizing positions appropriately,” Hayes said.
He went on to explain that the major factor that would be responsible for Bitcoin’s long-term upward trajectory is monetary policies that stimulate expenditure that is supported by debt.
In view of the fact that the United States is continuing making use of borrowed funds to provide military assistance to Israel, the balance sheet of the Federal Reserve is likely to demonstrate an increase.
According to Hayes, Bitcoin has surpassed the balance sheet of the Federal Reserve by a factor of 25,000% since the initial launch of the cryptocurrency. The utility of Bitcoin as a hedge against the depreciation of fiat money sources is highlighted by this fact.
Hayes is certain that Bitcoin will flourish despite the fact that the geopolitical landscape can still be described as somewhat mysterious. He encourages traders to avoid making emotionally charged assessments regarding political developments and to avoid making such judgments.
The best course of action is to remove yourself and your family from danger and then invest your funds in a manner that maintains their capacity to purchase energy while outperforming the depreciation of fiat currency. This is the best line of action.
SOURCE: DN
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