BitMEX Co-founder Predicts Fed and Bank of Japan (BOJ) to Lift Bitcoin to $1M

Crypto exchange BitMEX co-founder Arthur Hayes predicts that the complex entanglement between the Federal Reserve (Fed) and BOJ could propel Bitcoin to $1 million. 

Hayes believes the current complex web that the Fed and BOJ have over the Japanese yen could translate to panic-stricken money printing that would accelerate global asset prices. 

BitMEX Co-founder Anticipates Fed and BOJ to Lift Bitcoin Above $1M

The BitMEX co-founder considers that the Fed and BOJ are the secret drivers that would lift the Bitcoin price surge to $1 million. The American entrepreneur considers that both banks could deploy the easy button solution in an effort to rescue the flagging currency. 

In a blog published on Monday, May 20, Hayes submits that the dollar-yen exchange rate remains the iconic global economic variable. The former BitMEX chief considers it harbors the potential to prompt central bankers to increase the global money supply. 

Hayes traces the narrative to China as the origin of the worst-hit victim if the present devaluation trend is sustained. He considers that a weaker yen and stronger yuan translate to a CNYJPY exchange rate rise that hurts China’s export competitiveness. 

Higher CNYJPY would prompt China to devalue the yuan if the yen sustains the weakening rate. 

Hayes reflects on the export markets, indicating that local products are denominated with local currency and that a country whose fast-inflating currency benefits countries reliant on exports to sustain their economy. 

Hayes indicates that China is locked in an unfortunate position since Japan is the largest rival in the automotive export segment. As such, when the yen turns increasingly cheap, it will become challenging for China to compete in terms of prices.  

China to Compel US Intervention to Strengthen Yen

Hayes anticipates that the Bank of China (BOC) will pressure the US Fed to compel Japan to strengthen the yen. Hayes argues that even if China succeeds in such a course, BOJ will encounter difficulty strengthening the yen via traditional approaches such as raising interest rates. 

Hayes warns that raising the rates would have BOJ likely melting down faster than convicted FTX chief Sam Bankman-Fried did on the witness stand. He added that higher interest rates would have explained that doing so would ruin the value of Japanese government bonds, of which BOJ owns 50%. 

Hayes projects that efforts to shield bonds from imminent collapse would necessitate the BOJ to compel the pension funds and local banks to acquire the government’s debt. The parties will likely fund the purchase by disposing of the US treasuries and stocks, thus compromising American interests. 

Hayes considers that the global elites often deploy policy tools to support the status quo, inflicting pain at present or later. He says the BOJ would likely abandon raising rates and instead consider the easy button.

Hayes explains the easy button policy as tapping the unlimited dollar swap line, allowing the BOJ and Fed to swap yen for the US dollar at the defined rate. 

Hayes proposes that the BOJ will freely print additional yen without incurring extra costs. The dollars acquired would then be available to purchase the yen, strengthening the currency at the expense of a weaker dollar. 

Money Supply to Lift Bitcoin Above $1M

Hayes considers that the parties could also leverage a scenario where all parties win. Such would arise if China retained a weaker yuan than Japan, allowing the BOJ to remain solvent. The dollar would also weaken, given the open-market yen acquisition by BOJ. 

Hayes argues that the easy button to print money boosts liquidity, which drives up risky assets, particularly crypto. The investor considers that action to save the weak yen would mathematically stimulate flow into Bitcoin, thereby catapulting the price above $1 million. 

Hayes predicts that institutional investors should consider acquiring the US-listed Bitcoin ETFs if the theoretical position were to become a reality. As the lead crypto asset, Bitcoin will increase its price exponentially. 

Editorial credit: Vladimka production / Shutterstock.com

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