Bitcoin’s Ascent to $1M Could Signal the End of Dollar Dominance, Warns Arthur Hayes

Key Takeaways

• The Trump administration may pursue aggressive fiscal measures, hitting the dollar.
• For Arthur Hayes, the dollar dominance may end if Bitcoin reaches $1 million.
• For analysts, it’s something that may happen soon.

Arthur Hayes, former CEO of BitMEX, warns that the Trump administration’s aggressive economic policies could significantly impact the U.S. dollar.

Dollar’s dominance as the most-adopted currency may end, particularly if Bitcoin reaches $1 million. A possibility not ruled out by crypto analysts.

Trump’s Negative Effect on the Dollar

Arthur Hayes , Chief Investment Officer at Maelstrom, Co-Founder and former CEO of BitMEX, said the Trump administration may adopt aggressive fiscal policies to boost the U.S. economy, using tax credits, subsidies, and cheap financing to re-shore key industries and drive GDP growth.

The goal is to stimulate economic activity by encouraging domestic expansion and hiring, which would increase consumer spending. However, this strategy carries risks for the U.S. dollar.

A key concern is higher inflation, driven by increased demand and a larger money supply. To fund these initiatives, the Treasury would need to issue more debt. It may keep yields on bonds and savings below inflation rates.

This could lead to negative actual returns, reducing the purchasing power of savings and weakening the dollar.

For Hayes, if inflation outpaces returns on traditional savings, investors might lose confidence in the dollar, turning to assets like gold or Bitcoin as better inflation hedges.

Additionally, large budget deficits and increased borrowing could flood the market with dollars, diluting their value and potentially leading to currency depreciation.

New U.S. Policies

Trump and his team have clarified that they plan to weaken the dollar. This will coincide with funding the re-shoring of the American industry. With Republicans controlling the government, they can pass Trump’s economic agenda without significant opposition.

Democrats are likely to support these spending measures, as no politician can resist offering benefits to their constituents.

The plan involves passing bills similar to the CHIPS Act and Infrastructure Bill to incentivize domestic manufacturing of critical goods. This will spur massive bank credit growth as companies expand through government subsidies and loans.

At some point, the Fed is expected to exempt Treasuries from the SLR, enabling unlimited quantitative easing.

Industrial policy and regulatory easing will flood the market with bank credit. And it will also boost assets like Bitcoin and crypto. The COVID stimulus added around $4 trillion in credit; this new wave could be even larger, driven by rising defense and healthcare spending.

Shifting manufacturing back to the U.S. will be costly, potentially requiring trillions in financing, given the deep integration of global supply chains centered in China.

If the goal is to significantly reduce the debt-to-GDP ratio, it could require over $10 trillion in new credit. This unprecedented money creation could drive Bitcoin to $1 million as global investors seek a safe haven amid currency devaluation. Hayes dubs this economic approach “American Capitalism with Chinese Characteristics,” drawing parallels to China’s growth strategy over the past few decades.

Bitcoin Towards $1 Million

As Hayes mentioned, Bitcoin is probably going to be $1 million. He said we can expect Bitcoin and crypto to perform as well, if not better, than they did from March 2020 until November 2021. The real question is, how much credit will be created?

Maria Carola, CEO of cryptocurrency exchange StealthEX, is sure Bitcoin will reach that threshold sooner or later.

“The recent U.S. election has initiated a new bull cycle in the cryptocurrency market. Under the Trump administration, crypto regulation is anticipated to be overhauled, including a more favorable stance from the SEC, which tightened its oversight during Biden’s term. Investors expect clearer asset classifications and faster progress on stablecoin legislation,” she said.

According to Carola, there have been early talks about establishing a national Bitcoin reserve to support Trump’s promise of boosting the U.S. crypto industry.

Replacing SEC head Gary Gensler, creating a Bitcoin reserve, and positioning the U.S. as a “crypto superpower” could drive market growth.

“Factors supporting the crypto market’s growth include a strong U.S. economic outlook, a continued 21% corporate tax rate (enabling larger buybacks), geopolitical stability, and a trend toward Fed rate cuts,” Carola added.