Key Points
- BitMEX founder Arthur Hayes predicts a boost for Bitcoin due to the looming Japanese banking crisis.
- Another analyst suggests that Bitcoin’s growth will only occur once the miner crisis is resolved.
Arthur Hayes, the founder of BitMEX, believes that the impending banking crisis in Japan could lead to a surge in the value of Bitcoin (BTC).
Hayes suggests that the crisis could lead to an injection of US ‘dollar liquidity’, which would benefit the overall cryptocurrency market.
The Japanese Banking Crisis
The Japanese banking crisis is reportedly on the verge of erupting. Hayes sees this potential crisis as a significant factor for the cryptocurrency sector.
He notes that Norinchukin, the fifth-largest Japanese bank, is already under pressure and plans to sell $63 billion of its US and European bonds.
Hayes suggests that the US might need to intervene to resolve the crisis, leading to a ‘stealth dollar liquidity’ injection.
Impact on Bitcoin
According to Hayes, a sell-off of US Treasury (UST) by Norinchukin could prompt other large banks to do the same.
He explains that the US might not allow such a situation because it would lead to a spike in ‘yields’, making it very expensive for the federal government to fund.
In response, the US could persuade the Bank of Japan (BoJ) to use a repurchase facility program to ‘absorb the UST supply.’
In exchange, the US would give ‘freshly printed US dollars’ to the BoJ, leading to an increase in dollar liquidity.
Hayes also points out that a similar situation occurred in Q4 2023, which led to a boost for all risk assets, including cryptocurrencies.
In addition, the US banking crisis in March 2023 resulted in a +200% surge in Bitcoin value after a bailout was announced.
Hayes believes that the upcoming US election could force the US to intervene in the Japanese banking crisis.
He suggests that the next US liquidity injection could come from the Japanese crisis, which would be beneficial for cryptocurrency investors.
However, another analyst, Willy Woo, argues that Bitcoin’s growth will only occur once the miner crisis is resolved.
