{"id":23418,"date":"2023-09-13T09:40:04","date_gmt":"2023-09-13T09:40:04","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/bitmex-co-founder-says-btc-price-may-rise-if-monetary-policies-tighten\/"},"modified":"2023-09-13T09:40:04","modified_gmt":"2023-09-13T09:40:04","slug":"bitmex-co-founder-says-btc-price-may-rise-if-monetary-policies-tighten","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/bitmex-co-founder-says-btc-price-may-rise-if-monetary-policies-tighten\/","title":{"rendered":"BitMEX co-founder says BTC price may rise if monetary policies tighten"},"content":{"rendered":"<p><b>(Originally posted on : CoinJournal: Latest Bitcoin, Ethereum &amp; Crypto News )<\/b><br \/>\n<\/p>\n<div>\n<div class=\"post-article-image  -mt-24  mb-8  lg:-mt-32  rounded  overflow-hidden\">\n<picture><source srcset=\"https:\/\/coinjournal.net\/wp-content\/uploads\/imagecache\/2023\/09\/1694585769974-707fc32f-172d-4e81-ba65-cf5849ce34af-smartcrop-750x375.webp\" type=\"image\/webp\" media=\"(min-width: 750px)\"\/><source srcset=\"https:\/\/coinjournal.net\/wp-content\/uploads\/imagecache\/2023\/09\/1694585769974-707fc32f-172d-4e81-ba65-cf5849ce34af-smartcrop-363x181.webp\" type=\"image\/webp\"\/><source srcset=\"https:\/\/coinjournal.net\/wp-content\/uploads\/imagecache\/2023\/09\/1694585769974-707fc32f-172d-4e81-ba65-cf5849ce34af-smartcrop-750x375.jpg\" type=\"image\/jpeg\" media=\"(min-width: 750px)\"\/><source srcset=\"https:\/\/coinjournal.net\/wp-content\/uploads\/imagecache\/2023\/09\/1694585769974-707fc32f-172d-4e81-ba65-cf5849ce34af-smartcrop-363x181.jpg\" type=\"image\/jpeg\"\/>\n<\/picture>                    <\/div>\n<ul>\n<li>The Federal Reserve has increased its benchmark rate from 0.25% to 5.25% over the past year.<\/li>\n<li>BitMEX co-founder believed that bondholders might seek more lucrative \u201crisk assets,\u201d such as Bitcoin.<\/li>\n<li>Bitcoin\u2019s four-year cycles might be linked to central banks\u2019 low-rate policies.<\/li>\n<\/ul>\n<p>Challenging the conventional wisdom regarding the relationship between <a href=\"https:\/\/coinjournal.net\/bitcoin\/what-is-bitcoin\/\">Bitcoin<\/a> and interest rates, <a href=\"https:\/\/coinjournal.net\/exchanges\/bitfinex\/\">BitMEX<\/a> co-founder and a well-known macro-analyst Arthur Hayes recently authored a blog post in which he argues that traditional economic logic would crumble under the immense debt burden of the US government.<\/p>\n<p>Hayes said that \u201ccentral banks and governments are grappling with the use of outdated economic theories to address the unique challenges of today.\u201d<\/p>\n<p>Hayes\u2019 assertions come as the Federal Reserve increased its benchmark rate from 0.25% to 5.25% over the past year in an effort to curb inflation and maintain a 2% target. Although the Fed has succeeded in this endeavour, Hayes voiced concerns that inflation might persistently exceed expectations, given the substantial nominal GDP growth of 9.4% in Q3, contrasted with the 5% yield on 2-year US Treasury bonds.<\/p>\n<h2>GDP growth remains astonishingly high<\/h2>\n<p>In his analysis, Hayes highlighted that according to data from the <a href=\"https:\/\/www.atlantafed.org\/-\/media\/documents\/cqer\/researchcq\/gdpnow\/realgdptrackingslides.pdf\">Atlanta Fed\u2019s GDPNow forecast<\/a>, nominal GDP growth remained \u201castonishingly high.\u201d Conventional economic theory would suggest that as the Fed raised rates, a credit-sensitive economy should falter. Indeed, this was evident in financial asset markets, including stocks and Bitcoin, which experienced a downturn in 2022, eroding government capital gains tax receipts.<\/p>\n<p>However, this decline in tax revenue led to increased government deficits, which needed to be funded by issuing more bonds to repay existing debt. In the context of a high-interest-rate environment, this translated to higher interest payments to wealthy bondholders.<\/p>\n<p>Hayes succinctly summarized this chain of events: \u201cTo summarize: as rates rise, the government pays more interest to the wealthy, the wealthy spend more on services, and GDP continues to grow.\u201d<\/p>\n<p>As long as the economy outpaces the government\u2019s debt obligations, Hayes believed that bondholders might seek more lucrative \u201crisk assets,\u201d such as Bitcoin.<\/p>\n<h2>Efforts to combat inflation favour high-risk assets like Bitcoin<\/h2>\n<p>Hayes contended that the Federal Reserve\u2019s efforts to combat inflation would ultimately favour \u201cfinite supply risk assets\u201d like Bitcoin. In a recent blog post, Hayes argued that the Fed\u2019s strategy was siphoning money from one part of the economy while injecting it into another. As long as the Fed\u2019s approach to taming inflation remained uncertain, assets like Bitcoin were likely to experience long-term growth.<\/p>\n<p>In a previous essay, Hayes had posited that Bitcoin would thrive in response to a tightening Fed, whose actions might inadvertently increase the money supply. He asserted, \u201cIf the Fed believes that it must raise interest rates and reduce its balance sheet to quell inflation, it\u2019s essentially self-sabotaging.\u201d<\/p>\n<p>Generally, analysts perceive lower interest rates as beneficial for Bitcoin and other risk assets, as they create an environment where investors have room to speculate for potentially higher returns. In June, <a href=\"https:\/\/coinjournal.net\/exchanges\/coinbase\/\">Coinbase<\/a> analysts issued a report suggesting that Bitcoin\u2019s four-year cycles might be linked to central banks\u2019 low-rate policies.<\/p>\n<p>Hayes acknowledged the positive influence of low rates on Bitcoin\u2019s price, characterizing the asset\u2019s relationship with central bank policy as a \u201cpositive convex relationship.\u201d He concluded, \u201cAt the extremes, things become non-linear and sometimes binary. The US and the global economy are currently operating in such an extreme environment.\u201d<\/p>\n<div class=\"post-meta\">\n<hr class=\"mb-6\"\/>\n<h6 class=\"text-3xl  mb-4  text-green-300\">Share this article<\/h6>\n<hr class=\"mb-6\"\/>\n<h6 class=\"text-3xl  mb-4  text-green-300\">Categories<\/h6>\n<hr class=\"mb-6\"\/>\n<h6 class=\"text-3xl  mb-4  text-green-300\">Tags<\/h6>\n<\/p><\/div>\n<\/p><\/div>\n<p><a href=\"https:\/\/coinjournal.net\/news\/bitmex-co-founder-says-btc-price-may-rise-if-monetary-policies-tighten\/\">Source link <\/a><br \/>\n<br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Originally posted on : CoinJournal: Latest Bitcoin, Ethereum &amp; Crypto News ) The Federal Reserve has increased its benchmark rate from 0.25% to 5.25% over the past year. BitMEX co-founder believed that bondholders might seek more lucrative \u201crisk assets,\u201d such as Bitcoin. Bitcoin\u2019s four-year cycles might be linked to central banks\u2019 low-rate policies. Challenging the [&hellip;]<\/p>\n","protected":false},"author":7,"featured_media":23419,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[35],"tags":[],"_links":{"self":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/23418"}],"collection":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/comments?post=23418"}],"version-history":[{"count":0,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/23418\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media\/23419"}],"wp:attachment":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media?parent=23418"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/categories?post=23418"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/tags?post=23418"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}