Key Points
- BitMEX founder Arthur Hayes suggests that a weakening Japanese Yen could boost the cryptocurrency market.
- Hayes believes the potential currency wars and subsequent liquidity injection could particularly benefit Bitcoin.
Arthur Hayes, the founder of BitMEX exchange and CIO of Maelstrom crypto fund, has posited that the declining strength of the Japanese Yen (JPY) could stimulate liquidity and enhance the performance of Bitcoin [BTC] and the wider cryptocurrency market.
In his recent blog post titled ‘Easy Button,’ Hayes suggested that a surge in USDJPY towards 200 could trigger a financial reaction that he metaphorically referred to as “Push the Button,” implying an injection of liquidity.
Implications of a Weakening Yen
At the time of his writing, USDJPY traded at $156. The USD has gained strength against the Yen in 2024, with a year-to-date performance increase of 10%. From the Yen’s viewpoint, the Japanese currency has depreciated significantly in recent months.
Hayes theorized that a falling Yen could instigate currency wars between Japan and China, necessitating US intervention. A depreciating Yen would make it less costly for Japan to export more goods globally, making its exports highly competitive compared to China’s.
In response, China might devalue its yuan (CNY) by increasing its supply, in order to maintain its export advantage and stabilize the CNYUSD to a desired level.
Potential Impact on Cryptocurrency Market
Hayes suggested that the US could intervene by devaluing the USD, thereby increasing its supply. This could lead to a surge in the price of dollar-based assets due to an increased supply of USD. Coupled with an uptick in Yuan (CNY), a ‘crypto boom’ could be likely.
Furthermore, Hayes argued that such currency devaluation would be prime for a Bitcoin upswing, as it has proven to be the ‘best-performing asset in the face of global fiat debasement.’
This is not the first time Hayes has forecasted favorable macro conditions for a crypto rally. He previously suggested that US elections could increase US liquidity, potentially driving risk-on assets, including BTC.
