Bitcoin’s Next Bull Run? BitMEX Co-Founder Predicts Surge in Chinese Demand Amidst Yuan Debasement
Arthur Hayes, the co-founder of the cryptocurrency exchange BitMEX, is making a bold prediction: a surge in Chinese demand for Bitcoin (BTC/USD) is on the horizon. This surge, he believes, will be fueled by Beijing’s aggressive monetary stimulus measures aimed at tackling the nation’s prolonged property crisis.
Hayes argues that China’s adoption of quantitative easing (QE) – a strategy similar to those employed by the Federal Reserve and European Central Bank – will inevitably lead to yuan debasement. This, in turn, will make Bitcoin an increasingly attractive option for preserving wealth.
In a recent blog post, Hayes detailed his reasoning. He suggests that if China implements large-scale QE, as many economists anticipate, the yuan will likely experience a significant devaluation. He calls this “monetary chemotherapy,” a process that primarily benefits large financial institutions and well-capitalized players while gradually eroding the purchasing power of average citizens.
“Bitcoin is not a foreign concept to middle and high-income coastal urban dwellers,” Hayes notes, emphasizing that Chinese citizens are well-versed in utilizing peer-to-peer (P2P) platforms like Binance and OKX to convert yuan into Bitcoin.
China’s property bubble, which Hayes describes as “the largest in human history,” has proven resistant to Beijing’s current monetary measures. However, Hayes believes that QE, even if introduced gradually, will eventually scale to “tens of trillions of yuan” to counteract deflation and boost nominal GDP.
“China will ultimately follow the same path as the Fed, ECB and Bank of Japan,” Hayes predicts, outlining the potential impact on domestic currency stability.
Historical Precedent and the Potential for a Bitcoin Rally
Historically, Bitcoin has demonstrated a positive response to fiat currency debasement. Hayes points to the yuan devaluation in 2015 as a prime example. During this period, Bitcoin surged from $135 to $600 in a mere three months. With this historical precedent in mind, Hayes sees China’s potential QE as a likely catalyst for Bitcoin’s next price rally. He states, “When the wealthy coastal living Zhou decides they must have Bitcoin at any yuan price, the upside price volatility will harken back to August 2015.”
Implications for the Cryptocurrency Market
The landscape outlined by Hayes points to significant implications for the broader cryptocurrency market. As Chinese interest in Bitcoin potentially rises in response to Beijing’s economic policies, the cryptocurrency market could experience a substantial shift. While the Chinese government remains cautious about openly facilitating Bitcoin transactions, Hayes believes that access remains readily available.
“The exchanges operate P2P message boards where local traders assist comrades in trading crypto,” he explains, highlighting the resilience of the market despite regulatory controls.
The Future of Digital Assets
This intersection of economic policy and Bitcoin demand will be a key topic at Benzinga’s Future of Digital Assets conference on November 19. Industry leaders will gather to discuss global economic shifts and how policies like China’s prospective QE could impact the future of digital assets globally.
This analysis underscores the complex interplay between macroeconomic factors and the cryptocurrency market. As China navigates its economic challenges, Bitcoin’s position as a potential hedge against currency devaluation could drive significant demand, potentially shaping the future of the digital asset landscape.
