According to Arthur Hayes, founder of BitMEX crypto exchange, the crypto market may experience a bullish cycle triggered by Chinese investors. In a recent blog post, Hayes outlined a scenario where China allows its citizens to invest in cryptocurrencies, taking advantage of a hostile climate for cryptoassets in the United States. He believes the involvement of Chinese investors could trigger a rally in the crypto market, especially as the weakening of the Chinese economy leads to loosening of monetary policy and capital flowing into cryptocurrencies.
Arthur Hayes sets a scenario for a cryptocurrency rally
Hayes argues that as the Chinese economy slows, more credit will be issued, resulting in a weaker currency. This will provide the necessary catalyst for a fall rally by allowing capital to flow into appropriate instruments, including the BTC and altcoin market. Moreover, it will benefit Bitcoin holders more if China reduces its holding of Western assets and loyal investors buy Bitcoin derivatives. Hayes argues that the decline in China’s fiat holdings in the West will create a reflexive relationship, resulting in positive returns for Bitcoin investors.
Drawing parallels with past events, Hayes points to the summer of 2015, when the People’s Bank of China devalued the yuan against the dollar, triggering increased interest in Bitcoin, and its price tripled within a few months. He believes a similar scenario could emerge in 2023, given the current overvaluation of the yuan. Hayes proposes that China allow wealthy citizens to purchase cryptocurrencies as “fixed assets” and use Hong Kong as a brokerage zone for acquiring crypto-financial assets. Hayes, who proposes a scenario involving the issuance of crypto ETFs in Hong Kong, allows Chinese investors to indirectly benefit from Bitcoin’s price performance without physically owning the asset.
May take surveillance in China
Hayes argues that this scenario would address several issues for China, including providing a way for wealthy Chinese individuals to protect their wealth from the weakening yuan. By making purchases under Hong Kong’s control, China can maintain surveillance by ensuring that physical Bitcoins acquired through ETFs remain under their control. This would also bring potential benefits to BTC and altcoin traders by reducing the amount of Western financial assets held by the Chinese government.
Hayes highlights the positive impact of Chinese traders returning to the crypto market, suggesting that their actions may trigger similar reactions from other countries. Overall, Hayes offers a bullish outlook for the crypto market, with China’s participation potentially acting as a catalyst for renewed growth and market excitement.
