Чт. Дек 8th, 2022
Arthur Hayes. Source: a video screenshot, Youtube, CfC st. Moritz

With the price of bitcoin (BTC) falling lower, former CEO Arthur Hayes is joining the ranks of the most bullish bitcoin proponents, with a USD 1m price prediction as part of what he calls “the doom loop” that started with sanctioning Russia over its invasion of Ukraine.

“The shock of canceling the world’s largest energy producer from the dominant Western financial system cannot be undone,” Hayes wrote in a new lengthy essay titled The Doom Loop.

He added that policymakers cannot ignore what he called “the precarious nature” of funds held in the form of Western fiat after Western governments decided to freeze Russian central bank reserves, and said the Doom Loop’s occurrence therefore “is assured.”

“The Doom Loop will usher in USD 1 million Bitcoin and USD 10,000 — USD 20,000 gold by the end of the decade,” Hayes wrote.

Explaining what the doom loop is, the outspoken former exchange CEO said the loop starts when nations with trade surpluses begin to invest their surplus into hard assets such as bitcoin, gold, and other commodities, rather than USD-denominated debt assets.

Hayes predicts that this will force central banks in countries with deficits – mainly the US and the European Union – to engage in so-called yield curve control.

Yield curve control involves an effort by central banks to cap yields so that the government can continue to pay for itself in nominal fiat currency terms. It is thus a way for the government to inflate away debt rather than default on it.

And according to Hayes, it is yield curve control that will get us a bitcoin price of USD 1m “by the end of the decade.”

“[Yield curve control] is the end game. When it is finally implicitly or explicitly declared, it’s game over for the value of the USD vs. gold and more importantly Bitcoin,” Hayes wrote.

And while he admitted that many readers will likely find this far-fetched, he said yield curve control is “coming sooner than you think” thanks to actions taken by Western governments on sanctions against Russia.

Notably, Hayes also said that even if nation-states with surpluses stay away from bitcoin and instead invest all of their surpluses into gold, this will necessitate yield curve control in Western nations. And once this starts, a bitcoin price of USD 1m is in play, he repeated.

‘The EU is finished’

Similarly, Hayes pointed to another scenario that is also in play that could bring bitcoin to the USD 1m target: the breakup of the EU.

According to Hayes, the European Central Bank (ECB) will be forced to print money to ensure citizens can still afford necessities like food and energy in the face of a halt in supplies from Russia. As always, however, money printing leads to inflation, which in turn will lead to divisions between EU member states in the north and south.

“The ECB is trapped, the EU is finished, and within the decade we will be trading Lira, Drachmas, and Deutschmarks once more,” Hayes wrote.

Lira, Drachmas, and Deutschmarks were the national fiat currencies of Italy, Greece, and Germany before most EU countries adopted the euro as their single currency.

“As the union disintegrates, money shall be printed in glorious quantities in a pantheon of different local currencies. Hyperinflation is not off the table. And again, as European savers smell what the rock is cookin’, they will flee into hard assets like gold and Bitcoin. The breakup of the EU = $1 million Bitcoin,” Hayes wrote.

Not the first USD 1m per BTC call

The latest predictions from Hayes mean that the former crypto exchange CEO has joined the ranks of a number of bitcoin proponents who argue for a USD 1m BTC price target.

Perhaps most notable among them, Ark Investment Management, the fund led by the well-known technology investor Cathie Wood, says it believes BTC will reach USD 1m or more by 2030.

A significant driver for this will be demand from investors in the regulated part of the economy as more bitcoin-based investment products become available, with additional demand from use cases like remittances, nation-state treasuries, corporate treasuries, and as a currency in emerging markets, the firm said.

In the meantime, at 10:45 UTC, BTC traded at around USD 39,100 and was down 3% in a day, 6% in a week. It also dropped 16% in a month and 28% in a year.

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