Arthur Hayes, the founder of BitMEX, has been warning about an incoming global crash for some time now, and in a recent interview, he reiterated his predictions. However, he sees the event as an eventual “super bullish” sign for Bitcoin.
The Looming Global Crash
According to the World Bank, we may be edging closer to a global recession this year. This may be triggered by hikes in interest rates as a response to inflation. The hardest areas hit by this occurrence will be emerging markets and developing economies.
By now, especially following the collapse of economies during the onslaught of COVID-19, it’s been proven that Bitcoin and other cryptocurrencies do serve as an effective safe haven asset that can protect people’s wealth during an economic downturn. The decentralized nature of cryptocurrencies also makes them immune to government interference, which is a significant advantage in times of economic and/or political uncertainties.
Hayes is on the lookout for signs that point to the ultimate arrival of a global crash to know when and how he will put his pieces in play. However, that does not mean that Bitcoin will immediately pump from the get-go.
Hayes’ Bullish Prediction
In his recent interview, Hayes reminded that Bitcoin’s movement is not yet totally independent from other global risk assets. There’s always a time when they tend to go down together at the onset of the predicted economic collapse. However, this will be a signal of an impending bullish movement for Bitcoin.
The American entrepreneur explained that during a market crash, the reactions of monetary and fiscal authorities often result in the government printing more money to hand out to the people. Now, if the money supply outperforms the overall economic growth, then, inflation will most likely ensue. In this scenario, people usually turn to instruments that could help them preserve their wealth.
While gold has been the standard hedge against inflation over ages, access to it is typically limited and this asset has proven to be too cumbersome to acquire or store. With that, the arrival of Bitcoin which shares the same virtues as gold has provided a better alternative in many ways. Therefore, after that expected collapse would be a spike in demand for Bitcoin, Ethereum, and altcoins.
Initially, Bitcoin and Ethereum will usually go up and fall slightly. These will be outperformed by shitcoins that would seem to go to the moon over the few months. However, these will eventually lose their momentum and interest will get back to the base cryptos, namely Bitcoin and Ethereum. This kind of behavior will be observed during the secular bull market cycle.
Knowing these patterns will be crucial in knowing when to go in and out of the market to make the most out of the crypto bull run.
Take note that the crypto market is prone to volatile swings and even technical analysis can be overwhelmed by sudden changes in regulations and market sentiments at times. Therefore, Hayes’ observations and strategies should not serve as a foolproof bible in crypto investing. As always, everyone is advised to exercise their own due diligence and vigilance when investing in Bitcoin and other types of crypto.
Giancarlo is an economist by profession with a career spanning nearly two decades. His professional journey has seen him assume vital roles in various government and private organizations such as the Department of the Interior and Local Government (DILG), the National Economic and Development Authority (NEDA), Megaworld Corporation, and the China Banking Corporation in the Republic of the Philippines.
In addition to his civic and corporate pursuits, his forward-thinking approach has led him to manage several prominent websites in the banking and finance sector, notably the Australia-based RateChoice, where he immersed himself in the world of emerging financial technologies and where he found particular interest in Bitcoin all the way back to 2013.
Prior to his addition to Blockzeit’s dynamic team, he held an essential role as Project Manager for initiatives encompassing blockchain, stablecoin, mining, special economic zone development, and iGaming. This noteworthy chapter in his career unfolded under the auspices of InPlan Consultancy Services, Inc., the think-tank of IMPERO Consortium Management Corporation headquartered in Manila, Philippines, and Tokyo, Japan. InPlan, led by a distinguished retired Cabinet member of the Philippines, collaborates directly with IMPERO’s core management team, contributing to strategic planning and business development endeavors.