Arthur Hayes, co-founder and former CEO of the BitMEX exchange, predicts that Bitcoin (BTC) and the crypto market have entered a long-term expansionary cycle with no clear cap.
The analyst, known for his bullish vision, bases his predictions on global credit expansion and fiat money creation by central banks, rather than traditional halving cycles. This is a scheduled event in the Bitcoin protocol that halves the reward per block mined approximately every four years.
Mr. Hayes believes so. The price of Bitcoin is a direct response to the amount of fiat currency created by financial institutions.“especially since the 2008 global financial crisis.” After the market crash in March 2009, massive liquidity injections from the U.S. and China have kept the market on an upward trajectory with only “a few small bumps,” Hayes said in a recent interview.
Analyzing the current economic cycle, Hayes pointed to the role of former U.S. Treasury Secretary Janet Yellen, who was “tasked with injecting energy into markets at a time when Federal Reserve Chair Jerome Powell was supposedly fighting inflation.”
This strategy is It included an increase in the issuance of short-term bonds by the Ministry of Finance.extracted $2.5 trillion in liquidity from its reverse repo program (a financial operation in which the Fed temporarily sells assets such as government bonds to financial institutions and injects them into the market), which constituted “the story of this particular cycle.” But that facility is now down to zero, Hayes said.
Global currency depreciation as a driving force behind Bitcoin and cryptocurrencies
With this method of liquidity injection and the end of Bitcoin’s traditional four-year cycle pattern, Hayes was asked if there will be another event that can create enough confidence to restart the bull market. His answer was in the affirmative.
BitMEX’s founder predicts that the solution will come from the same actors, as “they will rely on central banks to print money, and this is global.” therefore, In this situation, the concept of a four-year half-life cycle does not apply..
Hayes expressed that “we should never put hard numbers on how long a cycle should last. Fundamentally, we always need to assess the situation,” and warned that this is because “politicians are trying to print more money,” which is why he believes “this particular cycle will extend into a period of 2027 or 2028,” and that “no one knows how long it will last.”
Asked about the impact of halvings on prices, Hayes said: “The more halvings there are, the smaller the impact is because the inflation rate, the delta, the change in the inflation rate is smaller each time, making the event less powerful.”
Regarding his predictions, Hayes believes that Bitcoin and cryptocurrencies are “entering a long-term bullish phase.” In the case of BTC, he predicts it will “reach $999,999 by 2027,” which would be an “explosive ceiling.”
Conflict of opinions regarding Bitcoin
In contrast to Hayes’ bullish view, Henrik Seberg, chief economist at Swissbloc, warned that Bitcoin is not the safe-haven asset that many believe, but rather a high-risk asset that could be dragged into a catastrophic decline due to its correlation with the stock market, as reported by CriptoNoticias.
“We are in the biggest bubble in history,” Seberg said, noting that financial markets are inflated to unprecedented levels. Far from being a hedge against market declines, Bitcoin moves in tandem with the Nasdaq and S&P 500.and excludes it being a store of value, describing it as a “risk asset that will likely outperform the Nasdaq on the downside after.”blow off top”, an extreme speculative spike before the crash.
Zeberg warns that while Bitcoin’s rise is partially due to an increase in money supply, Bitcoin does not necessarily protect, recalling that during the dot-com bubble, the Nasdaq fell 85% and the S&P 500 collapsed despite an increase in M2.
Disagreeing with Hayes’ reliance on global financial expansion as an indefinite driving force, Seberg argued that liquidity does not prevent history from being revised, and that Bitcoin, which is tied to risk assets, would face a similar fate in an environment of extreme overvaluation..
