Key Highlights:
- Arthur Hayes revealed how U.S. President Donald Trump and the Federal Reserve’s money printing initiative could benefit Bitcoin price.
- Hayes offered a gigantic BTC price target of $3.4 million, which grabbed the crypto industry’s attention.
- He also added that geopolitical shifts could impact the future trajectory of BTC.
A bold projection made by former BitMEX CEO Arthur Hayes has indicated that a burst of credit under U.S. President Donald Trump could lead to a boost in the Bitcoin price. He expects the BTC price to rise to $3.4 million in the next three years.
Arthur Hayes Explains How Bitcoin Price Could Surge to $3.4M
In an in-depth report, Hayes had maintained that Trump’s economic and geopolitical policies would create an environment where monetary growth would never be seen before. He warned that the Federal Reserve might be coerced into buying out the debt. “Do not doubt that team Trump will use all the tricks in the book to print the money this transformation of America requires,” he wrote.
Issuing debts as a means of funding the government is one of the factors that Hayes emphasized as a major contributor to the U.S. government. He estimated that until 2028, the Treasury would have to refinance maturing commitments as well as settle up deficits each year. “That brings my estimate of treasury debt issuance to $15.32 trillion,” Hayes noted, using both Bloomberg data and his own model.
The foreign central banks will be less likely to absorb this debt than it has been in earlier years (Hayes). Consequently, he anticipates the Federal Reserve to play a bigger role. “During COVID the Fed purchased approximately 40% of all treasury debt issued… I believe the Fed will purchase 50% or more of debt issued, because today even fewer foreign central banks will buy treasury debt,” he explained.
Hayes also resorted to historical parallels, saying that American leaders have many times accepted controversial steps in the context of the greater strategic goals. He cited the emancipation that was employed by Abraham Lincoln during the Civil War to weaken the Confederacy and the backing of civil rights legislation by Lyndon B. Johnson during the Cold War to enhance the image of America in the world. “American elite politicians have always done whatever it takes, even if it is very unpopular, to preserve the fruits of the supposed empire for the ruling class,” Hayes observed.
Hayes also included the lending activity of commercial banks in his prognosis, besides the involvement of the Federal Reserve. He projected another $7.5 trillion of bank credit by 2028, which was based on the high growth compared to the times before the COVID period. “Trump has approximately three years left to juice the markets, which equates to $7.569 trillion of bank loans issued,” he wrote.
Together with the projected Federal Reserve purchasing, Hayes came up with an estimation of an addition of $15.229 trillion in new credit. He then compared the correlation between credit growth and the price trend of Bitcoin in history. “The slope of the percentage increase in Bitcoin to a dollar of credit growth was ~0.19,” Hayes stated as he referred to data from the pandemic era. Using that ratio on the forecasted credit growth, he took him to a hypothetical Bitcoin price of $3.4 million by 2028.
Is the $3.4M Target Actually Feasible?
Although Hayes did not go all the way to support the proposed target of $3.4 million, he indicated that the Bitcoin price will be much higher than the current $115,000 value. The focus of his analysis is the assumption that systemic monetary inflation, along with a lack of foreign demand to purchase U.S. debt, will push domestic credit formation to never-before-seen heights. He sees this situation as good news for the performance of the Bitcoin price.
Further, the credit surge is a part of an overall geopolitical shift, which could benefit the Bitcoin price. “Today, another war against a more united, prosperous, and militarily strong Eurasia (Russia, China, India, and Iran) requires a drastic change in credit allocation,” Hayes added.
