Former BitMEX CEO Arthur Hayes says China seems to be prepping up to infuse the economy with overflowing credit thereby pushing Bitcoin BTC/USD and thus broader cryptocurrency industry higher.
What Happened: Hayes says that the U.S. and China are friends again and with this, the “Chinese money printer will go brrr.”
He goes on to add, “Let’s take a look at how the Middle Kingdom is about to throw gasoline on the raging fire that is the incipient crypto bull market.”
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Hayes highlights how the U.S. monetary policy will cushion more favorable conditions for Chinese authorities for issuing significant amounts of yuan credit into the Asian country’s struggling property sector.
Beijing has only one way out to open the doors of credit into the economy which is through bailing out property developers.
Conditions may be created where the yuan will strengthen, and the dollar will weaken. He adds, “This gives China the wiggle room to dramatically increase the amount of onshore yuan credit without the currency weakening.”
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Why It Matters: This global monetary change may benefit the crypto sector because if China prints yuan, then it will “make its way into the global markets and support the prices of all types of risk assets.”
Hong Kong is China’s window to the global capital markets, and it has some fully licensed crypto exchanges and brokers where Bitcoin can be purchased.
Hayes says that to move cash legally from the Mainland to Hong Kong, Bitcoin will be one of many risk assets that will be purchased.
Subsequently, with yuan credit overflowing, demand for dollar credit and liquidity will drop. He adds, “Given that the dollar is the world’s largest funding currency, if the price of credit falls, all fixed supply assets like bitcoin and gold will rise in dollar fiat price terms.”
In its third-quarter monetary policy report, the People’s Bank of China states that there is a changing structure of lending and observers should look beyond new loan volume, Bloomberg cites.
To conclude he says that there is no better place to be than in Asia when China is in bull market mode, “I will continue moving money out of T-bills and into crypto because I want to get in now before it becomes apparent through the data that China’s money printer is going brrrr.”
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