According to Arthur Hayes, Chief Investment Officer at the crypto investment fund Maelstrom, ongoing warfare in Iran and the race to dominate the AI industry will lead to increased money printing, which could benefit the crypto ecosystem and propel Bitcoin back to its all-time high this year.
In a Substack post published on Tuesday, Hayes stated that the competition between the U.S. and China to win an arms race has led both sides to adopt looser financial conditions and increase fiat currency printing, as the technology is “directly related to national security.”
He said, “The political will to win the AI race, combined with financial support funded by money printing and bank loans, has created an extremely favorable environment for cryptocurrencies.”
Source: Arthur Hayes
“The number of fiat units tomorrow will far exceed today’s, and the pace of change is accelerating due to rapidly increasing annual AI and electrification capital expenditures,” Hayes added.
According to CoinMarketCap data, the crypto industry largely reached new all-time highs last year, with market capitalization peaking at $4.28 trillion in October. However, the market weakened toward the end of the year, and analysts have been discussing when it will fully recover.
Bitcoin rising to $126,000 is "a sure thing."
Hayes stated that war has inflationary characteristics, and the conflict in Iran is no exception. Increased military spending, along with countries shifting their investment focus from U.S. Treasuries and stocks to domestic infrastructure, will lead to further monetary expansion.
He also predicted in March that the U.S. Federal Reserve might ease monetary policy to help fund the conflict between the U.S. and Iran and to boost the cryptocurrency market.
"Out of real and perceived necessity, politicians support this monetary expansion. That’s why, after February 28, Bitcoin outperformed other major risk assets such as gold and U.S. tech stocks," Hayes added.
According to CoinGecko data, Bitcoin's trading range over the past 7 days was between $79,467 and $82,496. As of Wednesday, it was trading at approximately $81,000, up more than 31% from its low of $62,822 on February 6. Gold traded at around $4,581 in early February and rose to $4,710 during the same period, a gain of 2%.
Arthur Hayes stated that since February, Bitcoin has outperformed other major assets such as gold. Source: Substack
“Bitcoin hit a bottom near $60,000 earlier this year, and with tailwinds from trillions of dollars and renminbi yet to be created, reclaiming $126,000 is inevitable,” Hayes said.
I expect this rally to accelerate further, while bears will cower in corners, as Bitcoin’s upward price trajectory becomes explosively powerful after breaking above $90,000, forcing many short call option holders to rush to cover their positions after their strike prices have been breached.