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Bitcoin's Pricing Projection Discussed by Arthur Hayes: Could It Soar to $1 Million?

Stock market crashes of 20-30% could potentially drive Bitcoin down to $70,000, yet expert predictions suggest a tenfold increase thanks to monetary support through economic stimulus from the Federal Reserve.

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3 min read
Stocks market downturn of 20-30% might drive Bitcoin's price down to $70,000; however, the digital...
Stocks market downturn of 20-30% might drive Bitcoin's price down to $70,000; however, the digital currency is predicted to skyrocket tenfold due to economic stimulus from the Federal Reserve, claims experts.

Bitcoin's Pricing Projection Discussed by Arthur Hayes: Could It Soar to $1 Million?

Informal Take

Listen up, folks! Bitcoin's dancin' on a tightrope, and it could plummet to $70K if stock markets take a nosedive of 20-30%. But whaddaya know, ex-BitMEX CEO Arthur Hayes thinks it'll skyrocket tenfold, thanks to some economic lifeblood from the Fed.

In his latest, wild essay, "Kiss of Death," Hayes takes a gander at Bitcoin through the magnifying lens of U.S. national debt and how to deal with it.

Hayes sees Trump being all guns blazing, tackling economic issues by ramping up borrowing. He talks 'bout how the Fed plays a crucial role in this jamboree — with the money supply and interest rates being the stars of the show.

Basically, Trump's got his eyes on the dude running the Fed, Jerome Powell, dubbing him a hair-splitter and piggybacking a claim that Powell slashed rates in September 2024 to lend a helping hand to Lady Kamala in the elections. Guess what? Powell's now got a mandate to curb inflation once the Republicans roll in!

Dang, talkin' 'bout conflict here! Powell and Treasury Secretary Scott Bessent are servin' different masters, as you might've guessed. Bessent aims to stretch the maturity of U.S. Treasuries and ease the debt crisis, but Powell's the maestro of credit supply and pricing.

It's a Tower of Babel, ain't it? Trump wants Powell to pick up the printing press again, knock down rates, and let the good times roll. But can he convince Powser to remain inflation-focused while saving the day?

That's the question, and Trump's got a nasty bag of tricks up his sleeve to make it happen. Blimey, could he be engineerin' a recession or stirring the fear of one to force Powser's hand? If so, the Fed might cut rates, put the brakes on quantitative tightening, restart quantitative easing, and loosen bank leverage rules.

One of Trump's key moves could be leanin' on Elon Musk's Department of Government Efficiency (DOGE). Musk's aim would be to cut government spending, shrivel the GDP, and slash wasteful payments. Here's the catch: it would spell mass layoffs and devastate the job market.

Now, imagine this: folks file for unemployment, home prices take a dive, and people start tightening their purses. Recession fears galore, and Powser's got no choice but to respond!

So, what's the cost? Hayes figures that for every 0.25% rate cut, $100 billion's injected into the system. If Powser drops rates to zero from 4.25%, he'd release a cool $1.7 trillion. Cutting QT would free $60 billion per month, that's $540 billion a year. Restarting QE and loosening leverage rules could squeeze another $0.5T to $1T into the mix.

Add it all up, and Hayes predicts a juicy $2.74T to $3.24T stimulus package. That sounds like 70-80% of the COVID-era stimulus ($4T from 2020-2022).

Bitcoin surged 24x from its 2020 lows to 2021 highs with those massive liquidity injections. Dang! Given Bitcoin's bigger market cap today, a 10x gain seems more realistic, shootin' it up to a million a piece.

But remember, Trump's plans hinge on three key assumptions:

  1. Trump'll finesse his "America First" agenda by goin' deep in debt.
  2. The DOGE department will be cuttin' spending, increasin' the risk of a recession.
  3. The Fed will dance to Trump's tune and fuel the markets with liquidity.

However, Hayes is unsure about Trump's crypto reserve strategy, noting it'll really make waves only if the U.S. government starts snatchin' up digital assets. That requires Republican backing to boost the debt ceiling or revalue gold. Hayes warns they have to take their time to avoid rushin' things.

In the end, Bitcoin's price action suggests a liquidity crisis, but the U.S. stock markets are lookin' strong. Watch out as a Wall Street correction (caused by recession fears) is gonna happen. When it does, Bitcoin'll bounce back like nobody's business, reachin' record highs after a little tumble!

  1. With the U.S. national debt and economic policies under scrutiny, the possible effects on the finance sector, especially investing in Bitcoin, are subjects of intense debate, particularly in relation to the mandate given to Federal Reserve Chair Jerome Powell to curb inflation.
  2. In light of the potential for a recession triggered by economic decisions, the role of politicians, such as former President Donald Trump, in influencing monetary policy, interest rates, and financing, could significantly impact the value of digital assets like Bitcoin, with unexpected ramifications for the general news and political landscape.

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