“Patience is beautiful,” suggests Arthur Hayes, co-founder and CIO of cryptocurrency and derivatives trading platform BitMEX, in an article dated June 1, 2023.
In his in-depth writing, he highlights that the Federal Reserve and the US Treasury are leveraging interest income from utilities and diversified debt, effectively turning it into a new form of money printer, leading experts to believe that Bitcoin’s value will remain strong.
Liquidity injection in US dollars
According to the Co-founder of BitMEXIncreasingly, depositors are transferring their funds from not-too-big-to-fail (TBTF) banks to TBTF banks or money market funds. This shift leads to the growth of balances within facilities such as repurchase agreement and interest on required balances (IORB).
As a result, TBTF banks find themselves with ample cash reserves, pay little or no interest on deposits and hold the surplus with the Federal Reserve, which contributes to an increase in the money supply.
The injection of USD liquidity into the system is expected to continue to grow, with the rate of change accelerating due to the payment of interest on larger balances. This continuous injection of liquidity acts as a stimulus program that benefits wealthy asset holders.
The article goes on to highlight that these individuals tend to invest their excess money in riskier assets such as gold, bitcoin, and AI technology stocks. In essence, the increase in “wealth” that is printed by the government and distributed as interest supports the demand for these assets.
(embed) https://www.youtube.com/watch?v=yrKfmWbfD2E (/embed)
Regarding Bitcoin, Arthur expresses confidence in its resilience, indicating that a retest of the $20,000 mark or a similar large decline is unlikely. These insights shed light on the dynamics of the financial landscape and its potential effects on the Bitcoin price.
Embrace the summer drop
Noting the usual drop in volatility and trading volumes during the northern hemisphere summer months, the co-founder suggests that many traders will quit out of boredom, making now a good time to gradually increase allocations to bitcoin, especially after the treasury’s public account is replenished. (TGA).
In addition, Hayes predicts that as more critics discuss the vast amounts of money being printed by the Federal Reserve and the US Treasury and distributed as interest, it will once again become more widely recognized that the money printer is fully functional.
This renewed understanding of the continuous flow of fiat currency is expected to have a positive impact on the price of bitcoin, with the co-founder suggesting that when the money printer goes crazy, bitcoin tends to experience significant price growth.