BitMEX founder Arthur Hayes published a thought-provoking article discussing the dynamics of historical economic cycles and distinguishing between local inflation cycles and global cycles.
Arthur Hayes: Bitcoin Overtakes Gold as Safe-Haven Asset in Local Economic Cycle
Hayes argues that the current economic environment is a domestic inflationary cycle in which Bitcoin has emerged as a superior safe-haven asset compared to gold due to its independence from national control.
In his analysis, Hayes touches on widespread views within the cryptocurrency community, such as the belief that the crypto bull market is over or that Bitcoin should rise along with large-cap US tech companies.
Juxtaposing these views with views on the changing geopolitical landscape and global monetary policies, he argues that we are at an important point in the transition from a unipolar world order dominated by the United States to a multipolar order with emerging leaders such as China, Brazil and Russia.
Hayes outlines three investment strategies based on one's belief in the system and its management:
If You Believe in the System But Not the Leaders, Invest in Stocks (stonks).
If you believe in both the system and its leaders, invest in government bonds.
If You Don't Believe in Neither, invest in assets that exist independently of government control, such as gold or Bitcoin.
He argues that in a domestic inflationary period, investors should prefer gold and Bitcoin and avoid stocks and bonds.
Conversely, in a global deflationary period, stocks should be preferred to gold and bonds.
Hayes points out the fragility of government bonds, noting that their values are often weakened by political incentives to print money and avoid direct taxation.
Hayes' perspective underscores Bitcoin's potential as a resilient asset in an uncertain economic environment resulting from the evolving geopolitical and monetary environment.
*This is not investment advice.