Arthur Hayes, the co-founder of BitMEX, a crypto derivatives exchange, has expressed that the recent surge in the cryptocurrency market isn’t merely due to expectations surrounding a potential Bitcoin (BTC) ETF.
In a recent essay named “The Periphery,” Hayes suggests that the upswing in the crypto arena is linked to the financial implications of the U.S. foreign policy, especially concerning Israel’s conflict with Hamas.
Hayes emphasized the continuous support pledged by U.S. President Joe Biden towards Israel’s conflict endeavors. He also indicated that the rising military expenditures and growing governmental debt have amplified worries about worldwide inflation during wartime.
Considering the expenses linked to Ukraine, the U.S. military budget is on the verge of a significant increase, especially if entities allied with Hamas, like Iran, decide to intervene through their affiliated groups, stated the cryptocurrency expert.
He further commented, “Such situations can lead to an uptick in future government borrowing. It’s staggering how much capital wars can consume.”
Institutional Investors Started Selling Off Bonds
In his piece, Hayes posited that institutional investors, foreseeing a hike in U.S. military spending, are beginning to offload bonds and treasury notes, pivoting towards different assets to find profitable returns.
Hayes opines that if long-term U.S. Treasury bonds lose their appeal as a secure option for investors, they might shift their focus towards assets like gold and, importantly, Bitcoin.
He contends that this shift will lead to an appreciation in the value of both gold and Bitcoin, primarily influenced by real concerns of worldwide inflation during times of conflict.
“Amid genuine apprehensions of global wartime inflation, both gold and, crucially, Bitcoin will start to appreciate,” Hayes stated.
He noted a surge in Bitcoin past the $30,000 mark, triggered by inaccurate whispers regarding the SEC’s endorsement of Blackrock’s spot Bitcoin ETF.
Hayes observed, “Following President Biden’s address, both Bitcoin and gold are seeing an uptrend, juxtaposed against a notable decline in long-term US Treasuries.”
He emphasized, “This isn’t about speculating on an ETF’s approval; it’s Bitcoin reflecting the anticipation of an intensely inflationary global conflict scenario.”
Bitcoin Price Hits 18-Months High
Hayes’s insights emerge as Bitcoin registers a notable 19.5% leap in merely a week, leading several to associate this upswing with developments regarding BlackRock’s Bitcoin ETF application.
Concurrently, the cumulative market value of digital currencies escalated by 12.6% within the same timeframe.
Highlighting other assets, Hayes noted the uptrend in gold ever since the hostilities in Gaza kicked off.
As of early this month, gold has ascended by 8.6%, currently priced at about $1,975 an ounce, according to Market Index.
While the prospective approval of a Bitcoin ETF might have influenced the recent market momentum, Hayes opines that apprehensions of global wartime inflation, propelled by heightened defense spending, are equally accountable for the price jumps in both Bitcoin and gold.
As of this report, Bitcoin’s price hovers around the $34,000 range, with little change over the last 24 hours.