Arthur Hayes, a prominent crypto capitalist, has unveiled a hugely bullish catalyst to Bitcoin (BTC). This would allow the king cryptocurrency to outperform the equity markets in 2023.
Scott Melker, a crypto strategist, has spoken out to say that he believes the Federal Reserve will loosen its monetary policies next fiscal year because of the gloomy macroeconomic background.
“Next year sometime, I believe that the Fed is going to have to pivot. That’s mainly due to the fact that I believe that the treasury market and probably the investment-grade corporate bond market are going to become dysfunctional. What does this mean?
There is a lot of supply and no buyers. The Fed is not buying, the Treasury is not buying – they’re actually issuing paper. The net sellers of treasuries are all large, non-US foreign governments. Japan and China would be the exceptions. You will see more Middle Eastern countries selling oil in dollars. However, this is not the case. There is also less recycling of dollars and less purchases of Treasury securities. This is because the US’s baby boomers are getting older. They have entitlements – social security, Medicare.
You have increased your defense spending. Who knows what this Russian-Ukraine conflict is going to lead to… Then, you possibly have a recession. The three-month, 10-year spread that a lot of the economists believe is the true recession indicator has turned negative, which basically means that the treasury market is telling us that there’s going to be a recession next year.
What does the government do when there is a recession? They need to issue more money to provide that social safety net… I think sometime next year, the politics of the treasury market and the corporate bond market are going to dictate that the Fed, at a minimum pauses, and, at a maximum, starts adding dollars back into the market.”
Hayes believes that Bitcoin will rally before his anticipated pivot.
“That’s going to obviously be positive for all risk assets, especially Bitcoin. Bitcoin is the last market that is free in the world, so it should trade this. You’ll see Bitcoin rise before the S&P [500] does.”
Bitcoin currently trades at $17,147. That’s an increase of more than 1% over the previous day.
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Disclaimer: The Daily Hodl’s opinions do not constitute investment advice. Before making high-risk investments, such as in Bitcoin, cryptocurrency, or other digital assets that could be potentially dangerous, investors should do their research. You are responsible for any losses you might incur and all transfers and trades that you make. The Daily Hodl is not an investment advisor and does not recommend buying or selling any digital assets or cryptocurrencies. The Daily Hodl is an affiliate marketer.
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