Bitcoin trader and CEO of BitMEX, Arthur Hayes, has stated that bitcoin is the best asset to hold during times of excessive money printing by central banks. He referred to the US Federal Reserve’s actions as printing “fiat toilet paper” and highlighted bitcoin’s scarcity and limited supply as key factors that make it an attractive investment. This viewpoint underscores the association between the increase in money supply and the potential for bitcoin’s value to surge.
How the Federal Reserve’s Strategy Could Benefit Bitcoin
BitMEX co-founder, Arthur Hayes, believes that the Federal Reserve’s current approach to combating inflation is flawed and will ultimately benefit “risk assets of finite supply,” particularly Bitcoin. In a recent blog post, Hayes explains how the Fed’s tactics are leading to the devaluation of fiat currency and the potential for the rise of Bitcoin.
The Federal Reserve is currently injecting money into certain sectors of the economy while simultaneously draining it from others. According to Hayes, this strategy is unsustainable and will lead to the devaluation of fiat currency. However, assets like Bitcoin, which have a limited supply, are likely to increase in value as fiat currency loses its purchasing power.
Hayes also criticizes the Fed’s Reverse Repo Program (RRP) and Interest on Reserve Balances (IORB), which are mechanisms used to control the money supply. By continually raising these rates, the central bank is forced to pay billions more to depositors, counteracting the intended effects of quantitative tightening (QT).
In contrast to the current approach, Hayes points to the 1980s when the Fed under Paul Volcker successfully combated inflation through a different monetary policy. During that time, the Fed adjusted its policy rate but did not micromanage the RRP and IORB rates. Hayes suggests that the current strategy is counterproductive and could have unintended consequences.
Despite the flaws in the Fed’s strategy, Hayes predicts that the central bank will eventually reverse course on QT as alternative buyers of U.S. government debt become available. At that point, Bitcoin may become an attractive investment option as investors seek to protect their wealth from potential inflation and devaluation of fiat currency.
