In his latest work article Titled “The Easy Button,” Arthur Hayes, founder of cryptocurrency exchange BitMEX, delves into the dynamics of global monetary policies and their subsequent connections to what he describes as the impending “Crypto Valhalla.” Hayes analyzes the political maneuverings of the world's major economies, particularly Japan, the United States, and China, and their effects on the cryptocurrency landscape.
The dawn of cryptography Valhalla
Hayes outlines a potential strategy for the Federal Reserve to coordinate with the US Treasury to engage in unlimited dollar-yen swaps with the Bank of Japan. This measure aims to manipulate exchange rates to stabilize the yen without causing devastating economic shifts.
“The Fed, on orders from the Treasury Department, can legally swap dollars for yen in unlimited amounts for as long as it wishes with the Bank of Japan,” Hayes says. This tactic, according to Hayes, aims to avoid immediate financial crises by postponing difficult economic decisions.
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The implications for the Japanese economy are stark, with Hayes predicting dire consequences if the Bank of Japan decides to raise interest rates: “If the Bank of Japan raises interest rates, it is committing seppuku,” Hayes points out, using the Japanese term for ritual suicide as self-assertion. potential. – A devastating economic impact, because the Bank of Japan is the largest holder of Japanese government bonds, and it will suffer huge losses.
The depreciation of the yen also had major repercussions on China's global economic competitiveness, especially in the area of exports. Hayes discusses how a weaker yen hurts China's export economy by making Japanese goods cheaper internationally, competing directly with Chinese products.
He suggests that the People's Bank of China may respond by devaluing the yuan to maintain competitive balance. “If the yen continues to weaken, China will respond by devaluing the yuan,” Hayes predicts, outlining potential economic retaliation that could destabilize global markets.
Hayes also sees a radical shift in monetary policy in China, including its large gold reserves. Presumably, China could use these reserves to peg the yuan to gold, thus creating a new economic landscape.
“It is estimated that China has a stockpile of more than 31 thousand tons of gold (…) I believe that for internal and external political reasons, China wants to maintain the stability of the price of the dollar against the yuan.” By pegging the yuan to gold, China can insulate itself from currency fluctuations and exercise greater control over its economic destiny.
The article also addresses the intersection between American politics and economic policy, especially in light of the approaching presidential elections. Hayes speculates that domestic economic pressures, such as job losses and the reshoring of manufacturing, could significantly influence the Biden administration's policy decisions.
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He argues that the administration may avoid aggressive moves against China to prevent a backlash in pivotal states: “Biden must win these battleground states to keep the orange man at bay. Biden cannot afford to devalue the yuan before the election.
Hayes points out that these global currency maneuvers could lead to a bullish scenario for cryptocurrencies. He advises cryptocurrency traders and institutional investors to closely monitor the US Dollar/Japanese Yen (USDJPY) exchange rate, stressing that large movements could indicate favorable shifts in cryptocurrency valuations.
“Watch the USD/JPY rate closer than Solana developers monitor the uptime,” he advises, highlighting the potential for significant financial opportunities in the cryptocurrency space. Regarding the timing of a potential “Crypto Valhalla,” Hayes expects that the pace of the yen’s depreciation will accelerate into a fall. “This will put pressure on the US, Japan and China to do something. The US election is a crucial catalyst for the Biden administration to come to some sort of solution.
According to Hayes, a rise in USDJPY towards 200 is “enough to put Chemical Brothers on hold and ‘push the button.’” This analogy to the Chemical Brothers song underscores the urgency and radical nature of the action required to confront this currency imbalance.
“If my theory becomes reality, it would be trivial for any institutional investor to buy a US-listed Bitcoin ETF. Bitcoin is the best-performing asset in the face of the global decline of fiat currencies, and they know it. When something is done about the weak yen, I will Mathematically guessing how inflows into the Bitcoin pool will push the price to $1 million and maybe even more. Stay creative, be logical, now is not the time to be a geek,” Hayes concludes.
At press time, Bitcoin was trading at $70,835.
Featured image from YouTube / Tom Bilyeu, chart from TradingView.com