Arthur Hayes, the billionaire founder of the cryptocurrency exchange BitMEXShe has a new theory on how Bitcoins BTC/USD The price could exceed a million dollars.
What happened: In a new blog post on Medium, Hayes outlined how a phenomenon he calls “The Doom Loop” would ultimately value Bitcoin 2,500% higher than its current price.
Hayes defines “The Doom Loop” as the three things countries do to fund their deficits: sell debt to domestic companies, the central bank prints money, and sell debt to foreigners.
Theory: If surplus countries decide to save in gold, hard commodities and/or bitcoin, then they will stop buying western debt, Hayes surmised.
This will likely lead to “uncomfortably high” inflation, prompting central banks to resort to yield curve control (YCC) to limit yields so the government can pay its bills in nominal fiat terms, Hayes said.
According to him, there will be no buyers for the trillions of dollars in US Treasuries that the federal government is issuing at negative real interest rates. Even commercial banks like it JPMorgan Chase & Co. JPM have specifically said they have no interest in buying government bonds with excess cash.
“YCC is the endgame. Finally, when it is declared implicitly or explicitly, it’s game over for the value of the USD versus gold and, more importantly, Bitcoin. With YCC, we get $1 million bitcoin and $10,000-$20,000 gold,” Hayes said.
See also: HOW TO BUY BITCOIN (BTC).
The former BitMEX CEO noted that several factors, including the Russia-Ukraine conflict, have already brought this economic scenario into play.
“Remember: The Doom Loop = $1 million bitcoin = $10,000 – $20,000 gold,” Hayes wrote.
He expects these predictions to materialize by the end of the decade, and Bitcoin farm-to-table economies to take shape around the world.
Last week, Hayes said he expects Bitcoin to fall as low as $30,000 in the current cycle given its high correlation with tech stocks.
Price promotion: According to data from Benzinga Pro, Bitcoin was trading at $38,650, down 4.41% over the 24-hour period.
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