Arthur Hayes predicts Bitcoin demand will surge as China introduces 'monetary chemotherapy'

Arthur Hayesco-founder of bitmexChina's demand is expected to rapidly increase Bitcoin BTC/USD The Chinese government is leaning toward aggressive financial stimulus to counter the effects of the protracted real estate crisis.

what happened: Hayes believes that China's introduction of quantitative easing (QE), which mirrors that of the Federal Reserve and the European Central Bank, will accelerate the depreciation of the renminbi and make Bitcoin more attractive for asset preservation. It claims to be an option.

In a blog post on Monday, Hayes suggested that if China implements large-scale quantitative easing, as many economists expect, it will likely lead to a significant yuan devaluation.

This “financial chemotherapy,” as Hayes calls it, will primarily benefit large financial institutions and well-capitalized corporations, while the purchasing power of the average citizen will be gradually eroded.

Hayes points out that “Bitcoin is not an unfamiliar concept for middle-to-high-income earners in coastal cities,” and that Chinese citizens are using P2P platforms such as Binance and OKX to convert RMB into Bitcoin. He pointed out that he was adept at exchanging.

The Chinese government's monetary policy has so far been insufficient to restore broad-based economic growth in the wake of China's real estate bubble, which Hayes describes as “the largest in human history.”

But Hayes suggested that even if quantitative easing is introduced gradually, it will eventually be scaled up to “tens of trillions of yuan” to combat deflation and boost nominal GDP.

“China will eventually follow the same path as the Fed, ECB and Bank of Japan,” Hayes predicted, with similar implications for domestic currency stability.

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Why it's important: Historically, Bitcoin has responded favorably to fiat currency declines.

As an example, Hayes highlighted the 2015 renminbi devaluation, when Bitcoin soared from $135 to $600 in just three months.

With this in mind, he believes that China's potential quantitative easing is likely to be the catalyst for Bitcoin's next price rally, saying, “The upside volatility in prices will be reminiscent of August 2015 when we decide we have to hold even at renminbi prices.” ”

The landscape Hayes describes could have significant implications for the broader cryptocurrency market, particularly as China's interest in Bitcoin could increase in the wake of Beijing's economic policies. There is.

Although the Chinese government remains wary of openly facilitating Bitcoin transactions, Hayes argues that access remains within reach.

“The exchange operates a P2P bulletin board where local traders help their fellow crypto traders,” he explains, describing the market as resilient despite regulatory restrictions. Masu.

What's next: This intersection of economic policy and Bitcoin demand will be explored at Benzinga's Future of Digital Assets conference on November 19th, where industry leaders discuss changes in the global economy and China's anticipated quantitative easing. Discuss how such policies could impact the future of digital assets worldwide.

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