In the most recent issue of the BitMEX newsletter, CEO Arthur Hayes predicts that the $10,000 Bitcoin will return this year. Hayes ties federal reserve inflation rates to the last bull run in Bitcoin, and thinks the Fed’s recent decision to halt interest rate hikes will predicate the next one.
He justifies his prediction by saying, in part:
But things are a changin’. The Fed couldn’t stomach a 20% correction in the SPX. In the recent Fed minutes, the dot plot now shows now rate increases for the rest of 2019. The Fed will start reinvesting its runoff in the third quarter. We are only a hop, skip, and a jump away from an expanding Fed balance sheet.
US monetary policy is only part of his prediction. He’s also look at moves by the Chinese central bank.
Beijing knows China must rebalance its economy away from credit-fueled fixed asset investment. However, Xi must not have the political cojones to push this sort of painful change through. Therefore, the PBOC said “fuck it” to any attempt to reign in credit growth. The two most important central banks are creepin’ back into a super easy credit regime.
Hayes thinks it’ll only take a few important shifts in the economy to kick off boom times again. He thinks cryptocurrency will be the last to “feel the love.” The tech sector is scheduling some major IPOs, and these, Hayes thinks, will precede a boom in crypto markets.
Crypto will be the last asset class to feel the love. Too many people lost too much money, in too short a time period, to immediately Fomo back into the markets.
Here he brings up an interesting point. Whatever money does enter during the next bull run – and everyone believes there will be one, not some long-winded depression followed by the collapse of most exchanges – the question of who that money will be is major. People who were burned during the last big run, and bought during the highs, are unlikely to return with much vigor. Only those who held on or managed to sell before the crash are likely to play at all. This being the case, there will have to be a great swath of new entrants.
Fortunately, there are increasing options for people to enter the crypto space. They can buy stablecoins from regulated issuers like Circle or Paxos. People can buy cryptos directly from a wide range of regulated providers. Many of these options were limited or difficult to penetrate in the months leading up to the last kickoff.
$10,000 is a relatively sane prediction when the price has been clinched between $3500 and $4000 for this long. Something has to happen, but there’s always a chance it will go the opposite direction. Demand could dissipate, as well, and newly created coins could be sold at a steep discount just to keep the miners moving.
Whatever happens, the next few quarters in crypto are likely to be interesting, if not fantastic.
Last modified: May 20, 2020 3:11 AM UTC