Arthur Hayes, founder of BitMEX and chief investment officer of digital asset fund Maelstrom, predicts in his latest article that China will adopt quantitative easing (QE) and other stimulus measures to combat deflationary pressures.
Arthur Hayes Predicts China's Move to QE Will Boost Bitcoin Growth
Hayes argues that Bitcoin will emerge as a hedge against currency depreciation as China increases its money supply to weather economic challenges. The influx of liquidity will create an environment where Bitcoin is seen as a store of value and is protected from a weakening yuan, he said.
China's Economic Pressures and the QE Example
China has been grappling with deflationary pressures in recent years, with stagnant growth, a cooling property market and weakening consumer demand posing significant risks.
While Chinese policymakers have so far avoided large-scale QE similar to that in the U.S. and Europe, Hayes believes economic realities will force a policy shift toward more aggressive stimulus measures.
“China will eventually join other major economies in using quantitative easing to stimulate growth,” Hayes writes.
As the Chinese government implements liquidity injections and fiscal stimulus, the resulting expansion in the money supply will likely erode the yuan's purchasing power, he said.
Bitcoin as a Hedge Against Value Loss
Bitcoin stands to benefit from China’s move toward QE, according to Hayes. “As fiat currency loses value, Bitcoin acts as a store of value and an inflation-proof asset, effectively providing a hedge,” he explains.
Bitcoin adoption could accelerate both domestically and globally as investors seek protection from currency devaluation.
Hayes points to Bitcoin’s growing institutional acceptance as another reason why the cryptocurrency is poised to thrive. “The interaction between liquidity-driven market conditions and Bitcoin’s fixed supply is conducive to long-term price appreciation,” he adds.
*This is not investment advice.