The European Union is “done”, says Arthur Hayes, while controlling the yield curve will put the US in a “fatal loop”.
Bitcoin (BTC) will cost $1 million by 2030, one of the industry’s best-known experts insists, as countries around the world shun the euro and US dollar.
In his latest blog, published on April 27, Arthur Hayes, former CEO of crypto derivatives giant BitMEX, reiterated his prediction of sky-high prices for Bitcoin and gold.
In light of the sanctions imposed on Russia for its invasion of Ukraine, a giant pivot in economic and geopolitical policy is looming, Hayes said.
As the United States and the European Union struggle to reduce dependence on Russian energy and food, the long-term repercussions will surely hurt them, sending Bitcoin to the moon.
Bitcoin, Gold, Commodities… but not Fiat
The situation is complex. Inflation, already at a 40-year high before the Ukraine conflict, is being exacerbated by Western sanctions, while Russia reels from the West freezing hundreds of billions of dollars of its assets abroad.
China, meanwhile, is monitoring the situation with a view to protecting itself from a copycat movement targeting its assets.
Since the late 1990s, a virtuous cycle has seen China sell cheap goods to the West in exchange for its fiat currency, which importers receive in exchange for government debt. This keeps interest rates low, and Chinese goods become even cheaper as a result.
Disrupted supply chains, inflation and now the risk of asset forfeiture are changing the status quo. Instead of changing its production model, however, Hayes believes China will have to find a way to reduce its exposure to worst-case scenarios.
“It is impossible for China to sell trillions of dollars and euros in assets without destroying the global financial system. That hurts both the West and China alike and greatly,” he wrote.
“So the path of least destruction for those assets is to stop reinvesting maturing bonds in the Western financial system. To the extent that China or its proxy state-owned banks can lighten Western stocks and real estate without hurting the market, they will,” he added.
Hayes identified “storable commodities, gold, and Bitcoin” as potential outlets for Beijing. While such a situation would be at the extreme ends of the spectrum, there should nonetheless be a non-zero chance of China reversing its stance on issues like Bitcoin mining.
“The Fatal Loop” Will Cause a $1 Million Bitcoin and $20,000 Gold
More surprising, however, is the publication’s perspective on the future of Western democracies and, in particular, the European Union.
Unable to be self-sufficient, Hayes argues, excluding Russia will fuel an unstoppable fire that will result in the disintegration of the European project.
Exporters like Germany will not be able to compete with China, while rampant inflation will create internal anger within the EU between North and South.
“The ECB is trapped, the EU is finished, and within a decade we will be trading lira, drachma, and German marks again,” his prediction reads.
The million dollars for each Bitcoin will also come because of the “fatal loop” in Western financial policy, especially the yield curve control (YCC), as a tool to avoid bankruptcy.
Gold – still the darling of the store of value narrative – will have reached $20,000 per ounce by the end of the decade.
In closing, Hayes added that, “the fatal loop will lead to $1 million per Bitcoin and $10,000 – $20,000 per ounce of gold by the end of the decade. We must agitate for interested flags to save some of their current account surplus in Bitcoin so that economies farm-to-fork farms sprout around the world. Once again, unlike gold, Bitcoin must move, otherwise, the network will collapse.”
By Audy Castaneda
