Bitcoin May Gain as Tariffs Weaken Dollar, Boost Demand
1min read Arthur Hayes, the co-founder of a prominent cryptocurrency exchange, has expressed his bullish stance on Bitcoin in the context of recent tariff policies. Hayes believes that the imposition of tariffs will lead to a correction of global economic imbalances, which in turn will prompt governments to print more money to alleviate the economic pain. This influx of printed money, according to Hayes, is beneficial for Bitcoin as it could drive up demand for the cryptocurrency as an alternative store of value.
Hayes' perspective is rooted in the idea that tariffs will weaken the US dollar, prompting foreign investors to sell US tech stocks and repatriate their funds. This shift in investment behavior is expected to favor assets like Bitcoin and gold, which are often seen as safe havens during times of economic uncertainty. The weakening of the US dollar could also encourage risk-on behavior, potentially leading to a rally in the crypto market.
Hayes explained that the stringent tariff placed on China may weaken the yuan. With a 65% effective tariff levied, China could respond by allowing the yuan to weaken past 8.00. A weakening yuan may force the hand of Chinese investors to look at riskier assets such as Bitcoin to preserve their wealth.
Hayes also noted that the two-year Treasury yield "dumped" following the tariff announcement. This is a signal that markets expect the Federal Reserve to cut rates and potentially restart quantitative easing (QE) to offset the negative economic impact. Fed rate cuts increase liquidity, also making riskier assets like crypto more attractive to investors.
Hayes' views are echoed by other market participants who also see the potential benefits of tariffs for Bitcoin. The general consensus is that the economic disruptions caused by tariffs could lead to a more favorable environment for cryptocurrencies, as investors seek out alternative assets to hedge against the risks associated with traditional financial markets. However, the short-term outlook for Bitcoin remains uncertain, with the cryptocurrency's price movements likely to be influenced by a range of factors, including macroeconomic developments and regulatory changes.
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