Global De-Dollarization and the Role of Bitcoin: Arthur Hayes

Arthur Hayes, CEO of crypto derivatives exchange BitMEX, weighs in on the global de-dollarization process and the role that Bitcoin is playing in it. He argues that with increasing tensions between the US and China, many countries are seeking ways to reduce their dependence on the US dollar and are turning to alternative currencies like Bitcoin. Hayes also discusses the potential for Bitcoin to become a global reserve currency, as well as the challenges it would face in achieving this status. This article explores the important role that cryptocurrencies may play as the world moves towards a more decentralized monetary system.

Arthur Hayes, the co-founder of BitMEX, recently published an essay discussing the potential decline of the US dollar as the global reserve currency. In his essay titled “Exit Liquidity,” Hayes explained that the dollar’s dominance worldwide is dependent on the United States’ open capital account and devotion to free trade. However, being the issuer of the global reserve currency also means that the US Federal Reserve and US Treasury are responsible for keeping the global economy stable, which could lead to inflationary pressure on the domestic economy.

Hayes highlighted that several global corridors of trade have signaled interest in moving away from settling trade transactions in dollars. For example, Chinese and French energy companies agreed last month to settle a liquified natural gas deal in the Chinese yuan (CNY) rather than the dollar. Moreover, Brazil and China have also entered into an agreement to trade using their national currencies, rather than the dollar.

Hayes argued that being so heavily dependent on the dollar means countries like China must import the United States’ monetary policy and also be subject to its political risk. While the United States has long been viewed as a reliable and politically stable nation, Hayes claims that this has changed in light of former President Donald Trump’s recent legal troubles.

Hayes predicted that the future will feature multiple currency blocs, but no currency “hegemon” like the US dollar today. Imbalances between the blocs will be settled in a “neutral reserve currency” like gold and crypto, which are “not tied to any particular country.” He added that as Bitcoin continues to prove it is the hardest money ever created, more countries will consider whether it is a suitable savings vehicle alongside gold.

Hayes also connected the threat of the dollar’s weakening role on the global stage to the Biden Administration’s crackdown against crypto companies. Since the collapse of FTX, many politicians from America’s political left have become more skeptical of crypto, with some questioning whether the asset class even belongs in the country.

In conclusion, Hayes believes that it’s worth considering the possibility of the US dollar losing its global reserve currency status for those looking to preserve their wealth. Moreover, he predicts that the future will feature multiple currency blocs, and imbalances between them will be settled in a “neutral reserve currency” like gold and crypto. As Bitcoin continues to prove its strength, more countries will consider using it as a suitable savings vehicle alongside gold.

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